Carbon tax aims to change behaviour, not increase revenue – minister
Irish Finance Minister Paschal Donohoe said he is currently considering whether an increased carbon tax could be revenue neutral.
Ireland’s Finance Minister has insisted that increasing carbon taxation is about changing behaviour rather than creating more revenue for the Government.
While the Government did not raise the rate of carbon tax in the last Budget, rises are expected in the coming years as Ireland strives to meet legally-binding targets on cutting greenhouse gas emissions.
The current tax on use of fossil fuels such as oil, petrol, diesel, gas, coal and peat is levied at 20 euro per tonne. Recent research by the Economic and Social Research Institute indicates a massive rise would be required in the next decade – to 300 euro per tonne – if Ireland is to meet its commitments to reducing CO2.
Paschal Donohoe said different models for increased carbon taxation are being considered.
“I see the introduction of carbon taxation and moving it up to a higher level as something whose main role is to look at how we can change behaviour as opposed to purely being about maximising additional revenue for Government,” he said.
“It’s about how we can change what is happening in our economy, it is about changing the choices families and citizens make.
“We had a discussion regarding the different models that would be open for Government to consider.
“If we look at making such an important change, it is important that we have clarity regarding what it would mean for the cost of living and support from across parties for making this change because it is a change that will only work if it is in the context of long-term commitment to the economy, knowing what the level of carbon taxation would be in the future, and I am committed now to working with the climate change committee within Government to see can we build that consensus and can we build a view concerning higher rates of carbon taxation?”
Asked whether increased carbon taxation would be revenue neutral, Mr Donohoe responded: “It does fall to the Department of Finance to decide if we are going to bring in a higher form of carbon taxation, what would be that level?
“And then if we are aiming for it to be mostly revenue neutral, how that revenue would then be made available back to the citizens, and that’s work that I am examining and developing at the moment.”