Thursday 20 June 2019

Employers' group Ibec wants 50pc hike in carbon tax in October Budget

Taxing issue: Finance Minister Paschal Donohoe holding talks in the past with Danny McCoy of Ibec. Photo: Julien Behal
Taxing issue: Finance Minister Paschal Donohoe holding talks in the past with Danny McCoy of Ibec. Photo: Julien Behal
Donal O'Donovan

Donal O'Donovan

Carbon tax should be increased by 50pc next year and continue to rise until it hits €80 a tonne by 2030, Ibec will announce today.

In a dramatic move, the employers' group said that it will campaign for higher carbon taxes as part of a wider push for Ireland to become a low-carbon economy.

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But the cash raised must be ring-fenced for energy-saving schemes including retrofitting, it has insisted.

Ibec will today publish a wide-ranging report which it says is a "roadmap" to the future of Irish energy use.

The report is titled 'Building a competitive low carbon economy - an Irish business roadmap to 2050'.

If it is done well, shifting Ireland to a low-carbon economy will pay off economically and socially, Ibec chief executive Danny McCoy believes.

"If we focus on smart, cost-effective and evidence-based policies, we can use the transition to enhance energy security, boost competitiveness, improve quality of life and create thousands of sustainable jobs," he said.

Carbon tax is designed to discourage use of fossil fuels or products that rely on fossil fuels.

Ibec's business members will support a "measured, stable increase in carbon taxes over time", the group's director of policy, Fergal O'Brien, said.

The new policy emerged from a year-long engagement with members, he added.

Carbon tax is currently levied at €20 a tonne and raised €491m for the Exchequer last year. Ibec says it should rise to €30 a tonne in the October Budget and then increase by €5 a year for a decade.

In very rough terms, that would mean an annual environmental levy of about €300 per Irish household in 2020 - doubling to €600 by 2025, when Ibec would back a review.

In theory, the stick of higher taxes will drive consumers towards lower carbon options. Energy conscious consumers will be rewarded with lower carbon bills.

However, carbon taxes are regressive - hitting the poor harder - and allowances would need to be made to mitigate that, Ibec thinks.

Savings can often include high upfront costs for both businesses and households - such as new energy-efficient boilers.

Across the economy that cost will be around €40bn of capital investment by 2030, most of it through private investment, which Ibec wants the State to support.

Irish households pay around 59pc of the current carbon tax total. Business pays most of the rest but that is passed on to consumers.

Ibec thinks a social partnership forum including Government, unions, employer bodies, farming interests and non-governmental organisations is needed to build and maintain public support.

That would include a special task force for the Midlands region, where the dismantling of dirty energy and peat works will inflict a big jobs hit.

Irish Independent

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