Ireland Drops Plan To Levy Carbon Tax
by Jason Gorringe, Tax-News.com, London
15 September 2004

Irish Finance Minster Charlie McCreevy has announced that the government is dropping its proposals for a carbon tax following a review of the planned measures.

“After an extensive public consultation process, the Government has concluded that a carbon tax is not an appropriate policy option. Instead, we will intensify action on the non-tax measures under the National Climate Change Strategy,” Mr McCreevy explained in a statement.

The carbon tax was intended to help Ireland meet its environmental commitments under the Kyoto Protocol, and would have reduced emissions by an estimated 0.5 million tonnes per year.

However, the government stated that it will instead pursue alternative measures, such as energy efficiency initiatives and the purchasing of additional carbon emission allowances on the international market.

“We concluded that the environmental benefits would not justify the difficulties that would arise, particularly for households, from the introduction of such a tax. Furthermore we cannot ignore developments in the international oil market,” stated McCreevy in defence of the decision.

The rationale behind the carbon tax was to change the relative price of fuels based on carbon emission, thereby altering consumption patterns. It would have applied to all carbon based fuels, including peat, coal, heating oil, diesel, petrol, natural gas and Liquefied Petroleum Gas (LPG).

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