Oireachtas Joint and Select Committees
Tuesday, 19 September 2023
Committee on Budgetary Oversight
Pre-Budget Engagement: Central Bank of Ireland and ESRI
Dr. Claire Keane:
Our modelling focuses on individual and household incomes because we can easily capture that. Again, one-off measures can help to tackle that, but in a way it does not make sense to have one-off measures while also increasing a charge at the same time. That can be avoided by not increasing the charge in the first place. There are obviously, when we get back to all this, calls around carbon taxes. Carbon taxes are unique because their aim is to reduce usage of things that will cause emissions, and there are certainly ways they can be used. When we look at tax rises based around carbon, and they will often fall on fuel, the money generated by carbon taxes can be used to buoy up the social welfare system, and there is a rationale for that. We are using carbon taxes to try to reduce consumption. Dr. Muireann Lynch of the ESRI and others have looked at whether people can adjust their behaviour that quickly. You want to try to push people to change their behaviour through carbon taxes but, in the shorter term, where they cannot adjust very quickly and move into energy-efficient houses or buy a new electric vehicle, you want to support them through the social welfare and taxation systems so that people are not at a loss in the shorter term.
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