Dempsey presses for Budget to include a range of `green taxation' measures

 

The Minister for the Environment, Mr Dempsey, is pressing the Government to introduce a range of "green taxation" measures in the Budget, including a benefit-in-kind tax on free offstreet car-parking spaces in Dublin and other cities.

"I am particularly concerned to support the complementary measures proposed by the Dublin Transportation Office (DTO) to deal with the traffic problem and that includes taxing parking spaces as well as providing incentives for `park-and-ride' facilities."

Mr Dempsey told The Irish Times that he was also in favour of a carbon energy tax to help Ireland meet its commitment under the Kyoto Protocol to cap the increase in greenhouse gas emissions at 13 per cent above their 1990 levels by the year 2010.

"We have to seriously engage on this issue because it's not something that will go away," he said. "And while we must keep an eye on the competitiveness of Irish industry, I've come to the conclusion in recent months that a carbon tax is unavoidable."

However, the Minister accepts that there is no possibility of taking such a radical step in time for the Budget on December 2nd. "What I'm trying to do is to work towards a greening of the tax system that would take account of our legally binding obligations."

For the past three years, green taxation has been under consideration by an inter-departmental committee, which includes the Department of the Environment and the Department of Finance. However, little progress has been made on the issue.

According to sources, the committee meets on a regular basis in the two or three months before a Budget. Various ideas for reform are put forward and noted by the Department of Finance, which then says there is not enough time to do anything about implementing them.

As a result, recent Budgets have contained little more than token gestures towards green taxation - such as the tax differential in the price of unleaded petrol - with little sign of movement towards a more comprehensive, environmentally-minded approach.

It is understood that Mr Dempsey accepted the argument that major changes could not be made in last year's Budget on the understanding that the issue would be seriously tackled this year. But continuing procrastination by the Department of Finance has made this impossible.

In recent weeks, senior officials of the Department of the Environment have detected a change in the attitude of their counterparts in Finance - not because of any conversion to environmental concerns but because they are beginning to see green taxes as a useful tool.

This may be linked to the wider macro-economic picture of the inflationary pressures that would be created if too much money is let into the economy as a result of tax breaks. Thus, they may see green taxes as a mechanism to claw back some of it.

It is also understood that the Revenue Commissioners have shifted their position about raising concerns over the difficulties of collecting such taxes and are planning to talk to the DTO about how fiscal measures could assist in implementing its action plan.

Apart from imposing benefit-in-kind tax on off-street car-parking spaces, Mr Dempsey favours replacing the current incentives for the construction of multi-storey car-parks with a new scheme which would provide tax breaks for the provision of peripheral "park-and-ride" sites.

He is also believed to be pressing for major changes in vehicle registration tax (VRT), so that a higher rate would be levied on larger, less energy-efficient cars. The aim would be to "send out a signal" that the issue of green taxation was being treated seriously.

In the longer term, the Minister is urging his Cabinet colleagues to look at fiscal measures to support his recently unveiled national waste management plan, including the imposition of a landfill tax which would be paid by all waste producers - including households.

On the issue of a carbon energy tax, Mr Dempsey believes that doing nothing is no longer possible, even though there is bound to be strong opposition from the ESB and industrial high-energy users, such as Irish Cement, as well as from other Government departments.

All of these interests are making submissions on the issue as part of a consultation process on the formulation of a greenhouse gas abatement strategy for Ireland, culminating in a consultative conference involving all parties - including environmental groups - on October 28th. This conference is likely to renew the focus on environmental taxes in the context of the 13 per cent cap agreed by Mr Dempsey as part of the EU burden-sharing arrangement reached in Luxembourg last June under which each member-state must achieve a specified target.

Ireland has already attracted strong criticism from EU sources over the previous Government's decision to abolish water charges, because this is diametrically opposed to environmental principles. But short of a directive from Brussels, the charges are unlikely to be reintroduced.