Budget carbon tax transparent and fair, says Royal Irish Academy

 

THE ROYAL Irish Academy has endorsed plans to include a carbon tax in the next budget, saying it would allow income taxes to be set at a lower level and was “the best policy for helping the competitiveness of ‘Ireland Inc’.”

In its latest statement on climate change, written by Dr Sue Scott, the academy describes a carbon tax as both “cheap and fair”. It would be transparent and “correctly targets pollution, to the advantage of recycling and cleaner technology”.

Noting that the capacity of the atmosphere to absorb carbon dioxide (CO2 ) is finite, it says each tonne emitted causes damage.

Ireland’s target for carbon emissions was also “very demanding”, requiring at least a 20 per cent reduction by 2020.

“Providing information on how to reduce emissions will not be sufficient to change behaviour – the conscientious will restrain their emissions, but unfortunately, they are exploited by those preferring to piggyback on their efforts,” according to Dr Scott.

Research showed that a carbon tax charged at, say, €25 per tonne “would make it worthwhile” for emitters – power stations, energy- intensive industry, even households – to reduce emissions because this would be cheaper than paying the carbon tax bill.

“A still higher carbon price would make it worth their while to reduce more,” Dr Scott said, adding that carbon taxes “can be applied through existing excise taxes on fuels, and would not need new administrative, trading and monitoring structures”,

Suggesting that there were political and practical problems with emissions trading schemes, she said: “Common sense suggests that international effort should move to actually adopting carbon taxes that would be applied to each and every emission. In six EU member states, carbon taxes have already been imposed, concurrent with a reduction of income taxes and social insurance.

“Studies indicate that this could be successful in Ireland, with emissions reduced and the revenues used to improve competitiveness.”

According to Dr Scott, a carbon tax “avoids the need to raise extra taxes to pay subsidies, and the Government receives revenues that can help the vulnerable and allow labour taxes to be set at a lower level than otherwise.”

The Royal Irish Academy’s full statement is available in its website, www.ria.ie