Mr. Gerry Kenny:

I have responsibility for indirect tax policy in the Department of Finance. I am accompanied by my colleague, Mr. Matt McGann, who leads the economic fiscal analysis unit within the Department. I thank the committee for its invitation to discuss the review of the public consultation on the uses of any carbon tax increase that may occur. Members will be aware that with the budget less than a fortnight away, we are not in a position to comment in any shape or form about what the Minister may or may not do in the taxation space in the next two weeks. He told the Committee on Budgetary Oversight last week that he was still considering his options. He did say, however, that if changes are to be made in carbon tax, the revenue from such a change should be treated in a different way from other tax changes that have been carried out. Separately, the Taoiseach stated earlier this week that all new revenues raised from carbon tax will be ring-fenced to fund climate action and a just transition to protect those most exposed to higher fuel and energy costs and for whom new jobs must be found.

In its report entitled, Climate Change: A Cross Party Consensus for Action, this committee recommended that the Department of Finance conduct a public consultation examining the options for use of revenue raised from increases in carbon tax. In line with this recommendation, the Department launched a public consultation asking respondents to select from a list of options. A report of the responses received is set out in the paper, Climate Action and Tax, presented to the tax strategy group in July. The consultation was conducted between 30 May and 28 June 2019. A total of 66 submissions were received broken down along the following lines: 19 from private individuals, 28 from businesses or business representative organisations; 13 from social, voluntary and community, SVC, bodies and six from other bodies, including political or public administration bodies, academics or academic organisations, including some members of this committee. The predominant view from the public consultation is that the additional carbon tax revenues should be ring-fenced for the purposes of enhancing the current SEAI grant scheme for household energy efficiency improvements and to fund sustainable transport infrastructure. The majority of respondents favoured these two options while most respondents were against the use of revenue for general Government expenditure or to pay EU fines arising from failure to meet targets.

Increasing the national fuel allowance to support those at risk of fuel poverty received a mixed response among all respondents. The option of returning the proceeds by way of dividend to citizens or households through the social welfare and-or tax system received a negative response overall, being one of the least supported and most opposed options. The option to use additional carbon tax revenues for broad climate action purposes, for example, through the climate action fund or similar, received a slightly negative response overall with most respondents stating their preference for transparent and visible use of revenue arising for measures related to climate change. The option to incentivise businesses to switch to more sustainable production measures garnered support among industry respondents and limited support from other respondents. The results were published in the climate action paper presented to the tax strategy group in July this year.