Dáil Éireann Debate, Thursday - 14 October 2004
50 Mr. Sherlock asked the Minister for Finance the reason he decided not to proceed with the plan to introduce a carbon tax; and his view on the role taxation should play in the promotion of the climate change strategy. [24671/04]
Amharc ar fhreagraA decision on carbon tax was made following a thorough examination of the issues involved, including how it would be implemented and the associated environmental, economic and social impacts. My Department also carried out an extensive consultation process in which 117 written submissions were received. Following this examination, the Government decided that a carbon tax was not an appropriate policy option and instead it would intensify action on the other measures under the national climate change strategy.
The Government concluded that the environmental benefits of a carbon tax would not justify the difficulties that would arise, particularly for households, from the introduction of such a tax. The carbon energy tax would have imposed price increases on many products already suffering sharp increases, particularly as a result of recent increases in international oil prices.
While a carbon tax would have involved a range of compensatory measures, these would not fully address the adverse economic and social effects arising. It would apply to products that are already subject to excise duties and where a new tax is not specifically necessary to increase the tax burden on such products.
The carbon energy tax was just one element of the Government's approach to meeting Ireland's commitments under the Kyoto Protocol. The Government remains fully committed to it.
Taxation can play a part in attaining environment objectives. As Minister for Finance I must ensure that policy on tax measures takes account of possible effects on Ireland's international competitiveness, particularly in relation to non-EU countries that compete with us and that may have low taxes on energy. I am also concerned, when framing policy, about the effect that the imposition of such taxes may have on the consumer price index and how they could impact on the less well off members of our community.
The national climate change strategy envisages other initiatives in the tax area with one such example being tax reliefs for green initiatives. Essentially it uses the tax system to provide incentives for certain behaviour. Such examples include capital allowances for corporate investment in renewable energy projects that have been available since 1998 and a provision in the Finance Act 2004 that provides for the introduction of a scheme for excise tax relief for biofuels. I am open minded about initiatives in the tax area that can have a positive impact on the environment. However, I must be mindful of competitiveness issues and the impact any particular measure may have on the overall community.
