Tuesday, 27 May 2008
Question 91: To ask the Minister for the Environment, Heritage and Local Government if he has been in contact with the Department of Finance or the Commission on Taxation regarding the introduction of a carbon tax; and if he will make a statement on the matter. [21196/08]
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.
Is the Minister accepting the report to which he referred which suggests 2010 as the earliest date for the introduction of a carbon levy? The chairman of the Minister's party indicated he has no difficulty in speaking to the Minister for Finance about these issues. The Minister did not answer the question on whether he would contact the Department of Finance to ensure it reviews or brings forward the introduction of a carbon tax for the 2009 budget which will be presented in December 2008, as indicated by him last Christmas at the time of the publication of his carbon budget and as stated in the programme for Government.
This is the most important point. This is now the preserve of the Commission on Taxation. My Department has been in contact with the chair of the Commission on Taxation and has put forward our views in a coherent way. Under the terms of reference its full report must be made by 31 September 2009. It is in a position to issue interim reports. We have to get this right. We must make sure that such an important issue is fully integrated into the financial arrangements of the country to ensure it works well, as envisaged in the ESRI report. I am confident it will happen.
I am also confident that we will have a carbon levy. It is a question of when, not if, it will happen. It will definitely happen, but we must make sure that we get it absolutely spot on. This is a rigorous Government in terms of the financial management of the country and I am sure we will get it spot on.
Will the Minister ask the Commission on Taxation to provide an interim report on the introduction of a carbon levy to meet the commitment he gave, namely, that it would be his top political priority to introduce a carbon levy for 2009?
As I understand it, discussions have taken place on the possibility of an interim report and it is up to the chair of the Commission on Taxation to determine whether that is possible. He has expressed the view that all elements must be integrated and that one cannot consider one issue in isolation. He is considering the matter. However, the Deputy must understand that when we appoint experts to commissions we must respect their judgment on these important matters.