'Green Taxes' Deemed Too Risky For McCreevy

by Jason Gorringe, Tax-News.com, London

17 January 2002

Documents released by the Ministry of Finance have revealed that radical new energy taxes proposed by Irish Environment Minister Noel Dempsey have been rejected by Charlie McCreevy following advice from the Tax Strategy Group.

The proposed changes, designed to help Ireland meet its obligations under the Kyoto Greenhouse Gas Agreement, included the phased introduction of new taxes on carbon fuels, an excise duty differential in favour of low sulphur petrol, and the linking of Vehicle Registration Tax on cars to CO2 emissions.

The Environment Ministry's pre-budget submission to the Finance Minister argued that as well as causing respiratory problems and cancers, transport pollution is responsible for around 22% of the country's climate change.

However, the government think-tank raised concerns that the changes, if implemented, could adversely affect income, inflation, and competitiveness.

The Tax Strategy Group stated that: 'The particular concern for any Minister of Finance is to ensure that any measures advanced to promote energy saving do not adversely affect Ireland's competitiveness, particularly in relation to non-EU countries which compete with us and which may have very low taxes or non-existent taxes on energy.'

However, if changes are not made it is feared that Ireland's greenhouse gas emissions will rise to 37% above 1990 figures by 2010, which is some 24% higher than permitted under the Kyoto agreement.

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