The Minister for Finance, Mr McCreevy, yesterday announced a consultation process for the introduction of a carbon energy tax - and was immediately criticised by environmentalists and motoring organisations. Tim O'Brien reports.
According to Mr McCreevy a carbon tax is being considered by the Government to encourage a reduction in the Republic's greenhouse gas emissions. A consultation paper has been published on the department's website and the deadline for submissions is September 30th next.
The move was immediately criticised by the AA whose spokesman, Mr Conor Faughnan, accused the Government of "using the environment as an excuse for revenue generation."
Mr Faughnan said a five cent rise in the price of diesel and petrol would yield an extra €200 million for the Exchequer. However, the rise would do "virtually nothing" to reduce the amount of petrol and diesel sold and do "absolutely nothing for the environment".
Mr Faughnan said a similar escalating tax policy in Britain had increased the price of petrol but had done nothing to reduce usage. Mr Faughnan added the AA had nothing against a "holistic review" of the tax system in relation to cars, to reduce emissions. Proposals in this area could include basing tax on emissions rather than engine size, which would have a direct effect on the environment, and reducing taxes on cars which were smaller and cleaner or used alternative fuels.
The "four pillars" of the Republic's carbon emissions are power generation; agriculture; industry and transport, in that order. Arguing that to simply increase tax on petrol and diesel under the guise of caring for the environment represented a "con trick", Mr Faughnan said there were a number of issues which the Government could incentivise - such as encouraging cars which run on gas - which would help the environment.
Unusually the motoring organisation was supported by An Taisce and the European Environment Bureau (EEB) - a non-governmental organisation which shadows the EU Commission environmental policies.
According to Mr Michael Smith of An Taisce carbon taxes should be "fiscally neutral".
Mr Smith said the point of environmental tax reform was to use taxes to influence behaviour and so reduce carbon emissions.
"It doesn't increase taxes which could have a negative effect on the popularity of reducing emissions, but switches taxes from things that are good to things that are bad. The key concept is fiscal neutrality not the introduction of additional taxes", he added.
Mr Smith said the EEB was against additional taxes.
According to the Minister's consultation paper the proposal is based on papers from the Tax Strategy Group, particularly in relation to a background paper Implementing Greenhouse Gas Taxation. It states the "focus of the proposed tax will be on energy related carbon dioxide emissions".
The main fuels concerned are peat, coal, oils and natural gas. It is proposed to have the tax proposal finalised by the end of 2004.