Issue of "green tax" flunked

THE Minister for Finance has certainly flunked it on the issue of "green taxes". Despite expectations that this year's Budget would introduce a range of new taxation measures to benefit the environment, Mr Quinn has offered only a few crumbs of comfort to the green lobby.

Last November, the Minister for the Environment, Mr Howlin, indicated that the Budget was likely to contain some green taxes, such as a change in road tax to reflect car fuel consumption rather than engine capacity and higher VAT on bituminous coal to make smokeless fuels more attractive.

However, it was apparent even then that the Department of Finance was resisting these measures because of their potential inflationary impact, and yesterday's statement clearly shows that the Mandarins of Merrion Street have won this argument - at least for the moment.

Mr Quinn did acknowledge that the issue of environmental tax policy "is one of growing relevance and importance worldwide". He might have mentioned a recent study by the European Environmental Agency showing the effectiveness of green taxes in achieving environmental goals.

Examples of "particularly successful" green taxation cited by the EEA include taxes on sulphur dioxide and nitrogen oxides in Sweden, on toxic waste in the German state of Baden Wurttemberg and on water pollution in the Netherlands, where environmental policy is taken very seriously.

Instead of going ahead with his own measures, Mr Quinn is awaiting proposals from the European Commission for an EU wide energy tax regime. In the meantime, he is asking a special inter departmental group to continue its examination of "possible initiatives which might be, taken up in subsequent budgets

Ms Sue Scott, an economist with the ESRI, has cited one Irish example of how taxation had been used to achieve environmental objectives - the differential in the price of leaded and unleaded petrol since it was introduced, leaded petrol has plummeted from 95 to 40 per cent of total sales.

In yesterday's Budget, this marginal differential was maintained. Unleaded petrol and diesel go up by 1.5p per litre, super unleaded by 2p and leaded petrol by 2.5p However, it could be argued that the differential should be greater.

Mr Quinn suggested that his extension for another year of the £1,000 grant for scrapping older cars "also has clear environmental advantages". But here again, critics would say the scrappage scheme has helped to fuel a record increase in car sales and contributed to growing traffic congestion.

The Minister even had another bonus for the motoring lobby. He announced an increase in capital allowance thresholds for company cars, which will make them even more beneficial to their users.

The only other environmentally related measure in the Budget was an improved capital allowance for farmers to controls silage and slurry pollution.