Leo Varadkar (Dublin West, Fine Gael)

I congratulate the Minister of State, Deputy John Curran, on his appointment. He represents a neighbouring constituency and I have been a student of his work over the years. I have learned much from what he has done and he is very much an impressive all-rounder. He has my sincere congratulations in that regard.

I add my voice to Deputy Coveney's disappointment that there are not more people on the Government side to speak about the economy, the environment and energy policy, which is what this motion is about. I commend Deputy Coveney on this motion and particularly the policy proposals being brought forward with regard to the windfall tax and the composite reduction in VAT.

The proposal, in summary, imposes a windfall profit tax on the profits of electricity generators who have been given free carbon allowances under the emissions trading system. It does not involve, as mentioned before, any price increases on energy, as these are set by the regulator who has confirmed there would be no price increase as a result of this windfall tax. Crucially for Fine Gael, the revenue from this windfall tax and any future green taxes would go back to taxpayers in the form of tax reductions, be they through VAT cuts — as in this case — or reductions in other taxation. That will be a major difference from the policy of the parties opposite as we have more debate on the need for carbon taxes and other types of green tax.

To speak with my enterprise, trade and employment hat on, this proposal would be beneficial to the economy. It would bring about a downward pressure on inflation, although I accept it would only bring the CPI down by 0.2%. More importantly, a VAT cut would send a very clear message to those who set prices that the Government is reducing VAT and they should not increase prices. In particular, it would set an expectation among consumers that they would at least see prices stabilise and not increase in those areas.

The Taoiseach addressed us earlier and reminded us that when VAT was reduced from 21% to 20% some years ago, the cut was reversed subsequently because retailers and other price setters did not pass on the reduced price to the consumers. We passed legislation and we now have the National Consumer Agency and Consumer Protection Act, which specifically enables that organisation to be given responsibility for monitoring VAT and excise reductions and ensuring they are passed on to the consumer. I am disappointed the Taoiseach is unaware of that and if he is aware of it, I am disappointed he does not understand that this power could be used. This relates to the various issues we have arisen in terms of rising prices.

Tax stimulus has already been mentioned with regard to reducing VAT by 1%, which would be beneficial to the tourism sector in particular. That area is starting to hurt this year and will hurt even more next year. It would also apply to the construction sector, which would certainly benefit from some stimulus. It would help stabilise prices with regard to home heating oil, gas and coal. I take this opportunity to reiterate my call for public support for this proposal from the Irish Business and Employers Confederation, IBEC, the Irish Small and Medium Enterprise Association, ISME, Chambers Ireland and some of the other business associations that favour this but have yet to publicly support it.

I feel an opportunity was lost when the emissions trading system was established. Perhaps a Europe-wide carbon tax would have been preferable to the trading system but, unfortunately, it is what we are stuck with. We will speak more on carbon taxes, particularly green taxes, in future. The key principle for Fine Gael regarding carbon taxes and green taxes is that any revenues raised through them must be returned to the taxpayer in other tax reductions. We will not allow carbon taxes and environmental taxes to become stealth taxes and will insist that they be genuinely revenue neutral. The proceeds of such taxes should not be spent on Ministers' pet projects, particularly those of Green Party Ministers who have shown their ability to spend millions of euro on ridiculous advertising campaigns on which not even Fianna Fáil Ministers would have the neck to waste money. This is a fundamental principle of Fine Gael. We are not prepared to see revenues gained through carbon taxes fall through the sieve of public spending, where the Government wastes money and causes deficits.

It is still the view of Fine Gael that reducing taxes can stimulate growth. In the past, when this country was in a bad economic situation and experiencing a deficit, we used significant cuts in corporation tax and income tax to stimulate the economy. I do not think we should forget this lesson. Reducing VAT, particularly in the construction sector, could be an economic stimulus and increase revenues. Obviously things are more complex than this but a lesson was learned by Ireland 20 years ago that reductions in taxation can stimulate the economy and we should not forget it.

The Government's amendment is very disappointing and I would almost prefer if it had voted down the motion rather than put forward this type of rubbish amendment. As Deputy Coveney said, the first five or six sections of the Government's amendment have nothing to do with the motion. I suppose they were copied and pasted from a previous amendment. It is strange that the emissions trading system is referred to as complex; it is not complex if one understands it. I would have hoped that the person who wrote this amendment, or someone in the Minister's office, understood it. Anything is complex if one does not understand it and this is, frankly, a stupid thing to put in an amendment.

The amendment also states that negotiations are currently taking place at EU level which will remove the possibility of free allowances post-2012. This is addressed clearly in our motion and policy. After 2012, when credits are auctioned, this would be used for VAT. Mention is made of a small impact on prices but VAT reductions would bring downward pressure on inflation.

I commend this motion to the House for four reasons. It is fair that electricity producers pay a tax on windfall profits. It is socially just because it will bring down the cost of home heating oil, coal and gas. It is environmentally sound for the reasons that have been argued and it is economically beneficial. Any one of these reasons is enough to recommend the motion and all four together should prove enough for the Members opposite to support it.

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