Michael D Higgins (Galway West, Labour)
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Question 140: To ask the Tánaiste and Minister for Finance his proposals to use the taxation system to encourage good environmental behaviour and discourage poor practice in regard to the commitment contained in the Programme for Government; and if he will make a statement on the matter. [17155/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I accept that the tax system can be used either to encourage or deter certain behaviours that have impacts on the environments. In this regard I have been to the fore in using the tax system to promote environmental policies; examples include

excise relief of over €200 million for biofuels over 5 years from 2006

50% VRT relief for flexible fuel vehicles, hybrid cars and electric cars

the inclusion of recycling companies in BES/Seed Capital Schemes from 2007, and

extending the tax relief for corporate investment in renewable energy.

In addition, work is continuing with respect to the commitment in last year's Budget, to introduce changes to the current VRT and Motor Tax systems to take greater account of environmental issues, and in particular CO2 emissions, from a target date of 1 January 2008.

Furthermore, the Programme for Government signals that a carbon tax/levy will be introduced over the lifetime of this Government. The matter of the introduction of a carbon tax is one of the issues to be considered by the new Commission on Taxation to be established under the Programme. Consequently, at this stage, the precise design of such a tax has yet to be determined. This will, of course, form an important part of the normal deliberative process of the Government in setting fiscal and environmental policy. Deputies will recall, however, that the Programme for Government indicates that the phasing-in of a carbon levy will be on a revenue neutral basis, so it is not intended that its introduction will lead to any net Exchequer revenue increase or net addition to the overall tax burden.