Brian Lenihan Jnr (Dublin West, Fianna Fail)

This price signal will stimulate innovation and increase awareness of energy efficiency. The impact of the carbon tax on agriculture has been mentioned by a number of Deputies, including Deputies Crawford, Breen, O'Mahony, Sherlock and Naughten. Although I appreciate the position many farmers currently find themselves in, the excise duty on agricultural diesel is only around one tenth of that applying to auto-diesel. That in itself is a significant concession. The new carbon charge must be based on the emissions that arise from the fuel used. Therefore, to ignore such emissions would simply undermine the rationale for the tax in the first place.

Deputy Bruton pointed out that the application of a carbon tax to coal and peat creates difficulties because of the potential for products with lower environmental standards to be sourced in Northern Ireland. I agree with him and assure him I will not be introducing the tax on coal and peat until I am satisfied this issue is addressed appropriately. That is why a specific date is not signalled in the legislation. Work has already commenced on this matter within the Department of the Environment, Heritage and Local Government.

Deputies Bruton and Burton referred to local authority services being made subject to VAT on foot of a decision by the European Court of Justice in July 2009. To comply with the court's ruling, it is necessary to extend VAT to certain categories of local government services.

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