Dáil debates

Tuesday, 27 May 2008

3:00 pm

Photo of John GormleyJohn Gormley (Dublin South East, Green Party)

The terms of reference of the Commission on Taxation require it to "investigate fiscal measures to protect and enhance the environment including the introduction of a carbon tax". They also provide that "as the introduction of a carbon tax requires a completely new tax charge and structure, the commission is asked to commence work in this area immediately". These terms of reference directly reflect the commitment in the programme for Government to investigate fiscal measures to protect and enhance the environment, including the introduction of a carbon tax.

At the invitation of the commission, my Department has made a submission on the wide range of issues encompassed in the commission's brief. On the issue of carbon tax, the submission sets out the background to the previous consideration of the measure and points out that the case for the tax is now more compelling and more urgent than ever, in the context of our Kyoto Protocol targets and the need for much greater reductions in emissions in the post-Kyoto period.

The submission also advocates looking beyond minimum compliance targets, no matter how stringent. The more fundamental issue is the need for an early and effective transition to a low-carbon society, which has the potential to deliver significant environmental and economic benefits.

The submission also draws attention to the recent ESRI medium-term review, which factors a carbon levy into its economic modelling for the period up to 2015. This analysis assumes that a carbon tax will be introduced in 2010 at the market price of carbon and that the resulting revenue will be used to keep labour taxes lower than they would otherwise be. The analysis shows that the economic impact is positive — the competitiveness of the Irish economy is increased, with higher employment and economic growth than would otherwise have been the case.

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