Business Budget 2019

Tuesday 11 December 2018

Naughten did not seek carbon tax hike as he dismisses 'short-term goals'

  

Denis Naughten
Denis Naughten
Paul Melia

Paul Melia

Climate Change Minister Denis Naughten did not seek a hike in the carbon tax in Budget 2019, he has confirmed.

The minister said increasing the tax from €20 per tonne would not drive behavioural change and a shift away from fossil fuels, and that he favoured putting a long-term price on a barrel of oil.

The lack of a price signal in Budget 2019 has been roundly criticised by the Opposition and environmentalists who said it showed the State was not willing to take efforts to tackle climate change.

It comes as an ESRI report found that the introduction of a tax would only have a minor effect on prices, but would help reduce climate emissions.

"There's been quite a bit of commentary on the carbon tax in the run into the Budget. The case I made to the Minister for Finance was we need to set a long-term goal. Short-term measures will not drive the type of change we need," the minister said.

He added he had not sought a hike in the tax, but instead wanted to secure cross-party support to establish a "long-term floor price" in relation to a barrel of oil.

By this, he said the price of a barrel of oil would be a minimum of €200 to the end user.

"That is going to provide the motivation for people," he said.

His views are in contrast to his Cabinet colleague Transport Minister Shane Ross, who said while carbon taxes did not form part of his brief, hikes were "inevitable".

"It is our job not to tax people but to change behaviour," he said. "We are very constructively and aggressively trying to change behaviour and our policy is to move people onto public transport. We're spending a lot of money and time trying to move people into electric vehicles and we have a full commitment to changing behaviour in other ways.

"On the tax itself, I prefer to leave that to the Minister for Finance. However, I feel it's inevitable and something we have to accept."

The ESRI study was part of a joint programme with the Department of Finance and Revenue Commissioners to examine the impact of an increase in the carbon tax.

It found that an increase of €5 per tonne would increase consumer prices by 0.13pc, and producer prices by 0.08pc. Doubling the tax to €40 per tonne would increase consumer prices by 0.53pc and producer prices by 0.37pc.

If introduced at €5 per tonne, emissions would fall by 1.2pc and by 4.7pc if a €20 hike was imposed.

The study also found that poorer households would see a higher proportion of their income affected. However, these households could be targeted and assistance provided.

Meanwhile, Mr Naughten said a 1pc surcharge on purchases of new diesel cars was designed to change behaviour.

Irish Independent

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