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Sunday 24 June 2018

ESRI urges diesel hike, air travel tax and fertiliser levy

Raising tax on diesel is one measure being considered. Stock picture
Raising tax on diesel is one measure being considered. Stock picture
Paul Melia

Paul Melia

Bringing excise duty on diesel into line with petrol, abolishing the tax relief for hauliers and introducing a levy on aircraft passengers could help tackle climate change.

A study from the ESRI also says eliminating the zero-VAT rate on fertiliser for big farmers could also help reduce carbon emissions which, although small, could have a positive effective on the environment.

It found that by introducing all four measures, a total of 390,000 tonnes of carbon would be saved, while also helping improve air quality. This equates to a 1.1pc reduction in overall emissions.

The EPA-funded research comes after the OECD last week warned carbon taxes would have to at least double to reduce emissions and implement the 'polluter-pays' principle.

The 'Environmental Impact of Fiscal Measures' report says that 142 taxation and fiscal measures in place ranging from carbon taxes imposed on fossil fuels, the cycle-to-work scheme designed to increase take-up of cycling and duties charged on fuel, have 246 impacts on the environment.

Some 98 measures have an effect on climate, with the least common being on water at 23. Just over half the measures were assessed as being positive.

It looked at four examples. The first was the difference in levies paid per litre of petrol compared with diesel, with the latter far higher.

By equalising these rates, fuel consumption, emissions and pollutants would fall.

If the zero-VAT rate on fertiliser was abolished for farmers, they would be more likely to spread less.

The ESRI said this change could disproportionally affect smaller farmers if normal VAT rates were imposed, but the hike could be refunded to those who used the correct amount.

It added the diesel rebate scheme for hauliers, where tax relief can be claimed if prices rise above a certain threshold, had encouraged greater consumption of the fuel.

Introduction of an air passenger duty would have a positive effect on emissions, but could result in fewer passengers and lead to job losses.

Many fiscal measures had a negative impact which had been "largely ignored" in their design. Reform could make a "significant contribution" to reducing emissions.

Irish Independent

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