Taxation and fossil fuels

 

A chara, – The idea of “polluter pays” is a useful principle. Domestic fossil-fuel consumption is subject to VAT, but for business, not only is the VAT reimbursed, but fuel expenses are allowable against other tax liabilities. Such a government subsidy is counter-productive in terms of moderating behaviour. Without introducing any new tax, a change in the tax treatment of fossil fuels in business could be achieved progressively: initially by eliminating VAT reimbursement, then over a period by disallowing expenditure on all fossil-fuels for taxation purposes. In a managed process, the de-exemption might initially apply to all building-related energy consumption, then extend to all other spheres.

A sectoral approach to the “polluter pays” principle must be introduced.

If dairy farming and beef production generate pollution, and are planned to expand so much as to ensure Ireland will not meet its Paris climate accord/EU obligations, thereby incurring fines, it is reasonable to put in place, now, a system to collect the potential fines – a rainy-day fund expressly designed to be available to moderate the substantial liabilities that that sector will visit on the Irish people. And so on for other identifiable sectors. Such carbon and greenhouse gas taxes should be ring-fenced expressly to meet the potential, dismally probable, liabilities.

And in the meantime, the air gets dirtier, unhealthy for man or beast or insect. – Yours, etc,

PAUL ARNOLD,

Ranelagh,

Dublin 6.