Carbon charge may not be as high as submission

 

THE PROPOSED carbon tax to be introduced in the December budget may not be as high as the 5 per cent rise in the price of petrol or the 12.5 per cent increase in the price of  peat briquettes recommended by the Commission on Taxation.

The Department of Finance said yesterday that the position and logic of the commission on the necessity for a carbon tax was “generally accepted” and would inform the approach of Minister for Finance Brian Lenihan when drawing up the budget.

While the department said Mr Lenihan would make no decision on actual tax figures until close to the budget, sources suggested that the tax could be pitched lower than the floor-price recommended by the commission, of €20 per tonne of CO2.

A tax based on that floor-price would lead to increases of over 5 cent per litre for petrol and diesel, of 52 cent for a bale of briquettes, almost €56 for a tonne of coal (or an extra €2.36 for a 40kg bag), and of almost €54 for 1,000 litres of heating oil.

The new tax will not affect electricity bills.

A spokesman for the ESB said: “The price of carbon is already included in your electricity bill. That applies across the board to all electricity suppliers, because electricity falls within the EU’s Emissions Trading Scheme.”

A spokesman for Bord Gáis said: “The proposed tax would mean an increase of €56.58 for residential natural gas users. However, this is less than the increase of €78.36 for oil-users and €146.53 for coal-users.”

He added that, “these figures are based on an equivalent heat output to the average natural gas customer consuming 13,800kw/h of gas and calculated against the volume of oil and coal that would give the same amount of heat output based on published boiler efficiencies”.

He said that Bord Gáis, “would welcome an approach that ensured that all of our customers (and especially lower income households) benefit from the extra revenues raised and that revenue neutrality is maintained”.

Leading economist Susan Scott addressed the Green Party Oireachtas members for up to an hour yesterday on the impact of the carbon tax in other EU member states, for example in Scandinavian countries where it had already been introduced.

Senior Greens said they were encouraged by the successful implementation of the carbon tax in these other member states and the fact that it had made the economies in those countries more efficient and competitive as well as encouraging consumers to explore new ways of saving energy.

Sources in the smaller coalition party, which has been behind the drive to impose the carbon tax, were adamant that measures would be taken to protect social welfare recipients from the financial effects of the new measure.

The sense among senior Greens is that the new tax should be set initially at a fairly modest level so that it can be “stress-tested” and political resistance minimised.

Two of the country’s leading authorities on climate change, Prof John Sweeney of Maynooth and Prof Frank Convery of UCD told The Irish Timesthat it was imperative that it be introduced now and that €20 per tonne should be the absolute minimum.

Prof Sweeney said: “The importance of a new tax is that it will get people to change their behaviour. To set a low tax is not going to achieve that aim and objective. The minimum is €20 a tonne.”

Prof Convery, a member of the Commission on Taxation, said that the Government should “get on with it” and impose a €20 floorprice in the budget.