Comhar Calls For Irish Government To Introduce A Carbon Levy

by Ulrika Lomas, Tax-News.com

02 October 2008

Comhar, the Irish Sustainable Development Council, has recommended that a non-ETS sector carbon levy should be introduced immediately, in its Budget 2009 submission.

Comhar suggests that the carbon levy should be set at the same price as the EU's Emissions Trading Scheme (ETS) market price, approximately EUR20 per tCO2. It is estimated that such a levy would generate EUR550mn.

Comhar's report was keen to stress the importance of ring-fencing these carbon tax revenues for specific activities such as compensation to vulnerable groups, labour tax reductions, and energy efficiency savings. The report recommends the following spending split:

"We propose that 40% of carbon revenues be utilised to reduce income taxes, 25-30% be used to compensate lower income households, and the remaining amount be invested in public good activities to reduce greenhouse gas emissions in the affected sectors."

The report also highlighted the necessity for targeted policy measures in a number of specific sectors:

• Transport
• Agriculture
• Services
• Residential
• Biodiversity

The report concluded that "a carbon levy should be introduced immediately in the non-ETS sectors to send the right price signal across the economy that greenhouse gas emissions must be reduced. A carbon levy will have an “announcement effect” that is expected to cause individuals and business to find ways to reduce their CO2 emissions."

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