Brian O'Shea (Waterford, Labour)
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Question 96: To ask the Minister for Finance his proposals to introduce tax measures to encourage the production of ethanol from sugar beet; and if he will make a statement on the matter. [26540/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Section 50 of Finance Act 2004 provided for the introduction of a limited scheme for excise tax relief for biofuels. The purpose of the provision was to allow qualified and conditional relief from excise of biofuel used in approved pilot projects for either the production of biofuel or the testing of the technical viability of biofuel for use as a motor fuel. As the Deputy may be aware, it was necessary to obtain approval from the EU Commission as the proposed scheme represented a State aid. Approval was granted in March 2005 and the scheme was subsequently advertised by the Department of Communications, Marine and Natural Resources. Excise relief was granted to successful applicants to the scheme from August 2005 for a total of 16 million litres of fuel.

The current scheme includes excise relief on ethanol production up to a limit of 2 million litres. It is up to the project promoter to choose the most appropriate feedstock to produce the ethanol. I am informed by my colleague, the Minister for Communications, Marine and Natural Resources, that Maxol, the producer of the 2 million litres of bioethanol under the current scheme, is sourcing the ethanol from the by-products of cow's milk.

The possible introduction of a wider scheme of excise relief for biofuels, including bioethanol, is under consideration. Sugar beet, as under the current scheme, would be an option for bioethanol producers in any such scheme.

Brendan Howlin (Wexford, Labour)
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Question 97: To ask the Minister for Finance the procedures in place to monitor whether or not those who claim to be non-resident for tax purposes are actually resident out of the country for the required period; his plans to improve monitoring in this regard; and if he will make a statement on the matter. [26630/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I have asked the chairman of the Revenue Commissioners to monitor the application of the current non-resident rules, through examination of cases handled in the Revenue large cases division, and to provide me with a report once this examination is complete. The chairman has confirmed to me that this work is under way and that he will report to me as soon as possible.

I am informed by the Revenue Commissioners that the procedures adopted in relation to validating a claim to non-residence status depend on the circumstances in each case. The administration of the validation procedures is a matter for the Revenue Commissioners and I am informed by them that these procedures are kept under review. I am, however, informed that the methods used to verify claims to non-residence include a range of tests and an intelligence dimension which for obvious reasons they do not publicise. In addition, Revenue has statutory powers to make all relevant enquiries in relation to any aspect of tax returns including claims to non-residence status. I am further informed that a number of audits are at present under way into claims to non-residence and that these audits will be a regular feature of the risk-based programmes operated by Revenue.

In accordance with normal practice it is not appropriate for the Minister to comment on possible changes to tax in the run-up to the annual budget and Finance Bill.

Paul Gogarty (Dublin Mid West, Green Party)
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Question 98: To ask the Minister for Finance if he will reconsider the introduction of carbon tax in view of the fact that the ESRI have shown that lowering labour taxes and VAT on the back of revenue raised from carbon tax will leave the economy better off; and if he will make a statement on the matter. [26550/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Government decision on carbon tax was made in September 2004 following a thorough examination of the issues involved, including how a carbon tax would be implemented and the associated environmental, economic and social impacts. In addition, my Department carried out an extensive consultation process in which 117 written submissions were received.

Following this examination, the Government decided that a carbon tax was not an appropriate policy option and that, instead, it would intensify action on the other measures under the national climate change strategy.

The Government concluded that the environmental benefits of a carbon tax would not justify the difficulties that would arise, particularly for households, from the introduction of such a tax. In this respect, the carbon energy tax would have imposed price increases on many products already suffering sharp increases, particularly as a result of recent increases in international oil prices.

While a carbon tax would have involved a range of compensatory measures, these would not fully address the adverse economic and social effects arising. Moreover a carbon tax would apply to products which are in the main already subject to excise duties and where a new tax is not specifically necessary to increase tax rates.

The carbon energy tax was just one possible element of the Government's approach to meeting Ireland's commitments under the Kyoto Protocol to which the Government remains fully committed.

Taxation can play a part in attaining environment objectives. However, as Minister for Finance, I am concerned to ensure that in developing policy on tax measures we take into account any effects on Ireland's international competitiveness, particularly in relation to non-EU countries which compete with us and which may have low taxes on energy. I am also concerned in framing policy about the effect that the imposition of such taxes may have on the consumer price index and how they could impact on the less well off members of our community.

Apart from the carbon tax, the national climate change strategy does envisage other initiatives in the tax area with one such example being tax reliefs for 'green initiatives'. Essentially this approach uses the tax system to provide incentives for certain behaviour. Such examples include capital allowances for corporate investment in renewable energy projects, which have been available since 1998, and a provision in Finance Act 2004 which provides for the introduction of a scheme for excise tax relief for biofuels.

As far as the ESRI report is concerned, the report concentrated on energy policy in relation to electricity and gas and looked at other fuels only in the context of electricity generation. While the ESRI proposes the introduction of a carbon tax, I can confirm, as the Minister for the Environment, Heritage and Local Government has already stated, that the Government decision of September 2004 is not scheduled for review. The Deputy's question infers that the economy would be better off with a carbon tax. However, to pursue policies that would increase taxes on transport fuels and home heating oils, at this time, would have negative economic consequences.