Mary Harney (Dublin Mid West, Progressive Democrats)
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The proposed introduction of carbon tax is in response to our international obligations under the Kyoto Protocol to reduce emissions of greenhouse gases. The Minister for Finance signalled the introduction of a general carbon tax from the end of 2004 in his budget speech in December 2002. A consultation paper on proposals for a carbon energy tax in Ireland was published by the Department of Finance in July 2003 and the submissions received as part of this consultation process were published on that Department's website in February 2004.

My Department provided a submission as part of the consultation process and has made it clear that, in developing the tax framework, a crucial consideration must be the minimisation of any negative impacts on the enterprise sector, including possible impacts on competitiveness and employment. The green tax group, a sub-group of the tax strategy group which has representatives from a range of Government Departments, is progressing work on the design of the proposed tax and my Department is fully involved in this process.

Forfás, in conjunction with my Department, had studies undertaken in 2002 to assess how best to achieve the greenhouse gas reduction targets specified for the enterprise sector as cost effectively as possible and in a way that would minimise the effects on competitiveness. Indecon International Economic Consultants and Environmental Resource Management, ERM, were appointed to undertake these studies which focused on taxation, negotiated agreements, emissions trading and investment in international greenhouse gas reduction projects. This work, and other work both at national and international level, has been contributing to the development of policy for emissions reductions in the enterprise sector and is a useful source of information in developing a framework for carbon taxation.

The potential implications for industry of the introduction of a carbon tax in Ireland will depend on factors such as the level of the tax, whether revenue from the tax is recycled and whether there will be provisions to exempt companies from the tax who are engaged in other greenhouse gas emissions reduction measures such as emissions trading and negotiated agreements.

The Deputy refers to a study on the predicted impacts of various types of environmental taxes in different countries. My Department has seen the article in question which is one of many reports on this issue. The study is interesting but does not specifically focus on the subject of carbon tax; moreover, it makes the point that simulation results remain uncertain and should not serve as the only guide to policy making.