Professor Edgar Morgenroth:

I will take them in turn. On the first point, I think the issue the Deputy raises is very important. My estimates are that in or around 10% of our tax revenue comes from transport, which is very significant. When one compares that to other countries, by a margin, it is the highest that I have been able to calculate. In the UK it is in or around 4% to 5%, so it is less than half. In Germany and the Nordic countries about 2% of tax revenue comes from transport. The international literature has looked a little bit at environmental tax reform where one essentially taxes pollution and subsidises anything that does something good to the environment. The scale of the tax revenue is so significant that if people behave rationally and reduce the pollution they cause, which is dependent on that level of pollution, one automatically reduces one's tax revenue.

It is impossible to design a scheme where one keeps one's tax revenue as it is while simultaneously achieving the desired behavioural response. While the tax measures are very effective, as shown by the fact that otherwise one would keep getting the same revenue, they will eventually cause other issues for revenue generation in the State. One has to be very careful about how far to bring this and a plan is needed because if tax revenue from transport is entirely dependent on taxing the bad things that come with transport, such as pollution, when that goes the revenue goes too and it will need to be replaced. That is a real challenge and it is more of a challenge in Ireland because the share here is so high. Other countries have looked at it, though I am not aware of any analysis. Given the scale of revenue from transport, however, simply using fiscal measures would have significant revenue implications.

The measure we picked in the report is quite nice and, at least in the short and medium run, it results in higher rather than lower revenue. If all motorists choose to go for electric vehicles, however, we will get no money from excise rates on fuel. Eventually, behavioural change will have an impact on revenue. The evidence shows that fiscal instruments have a big effect and the growth of diesel has been a direct consequence of the changes introduced in 2008. These changes reduced our CO2 emissions but they have left us with other issues. Things such as PM and NOx emissions were not part of the considerations in 2008 and people were mainly talking about CO2 because that is what we wanted to address. On their own, however, these measures are not enough and more needs to happen than just tax changes.

The ESRI has done some work on the potential market penetration of electric vehicles. Clearly, the type of vehicle needs to broaden to have a wider appeal and if one drives long distances the current set of electric vehicles is probably not ideal because, without recharging stations, a driver might be too limited. Similarly, an electric vehicle is not really suitable for towing big loads. In certain segments of the market the industry has not provided suitable solutions to enable us to get the penetration we require.

In respect of our general over-reliance on tax, one should always think of having a mix of policy measures, with taxes playing a role within that. I have written about spatial patterns of land use and if we allow the sprawl to continue that will have transport implications, as well as implications for the way we deliver public transport. We need a wider set of measures to achieve our goals.