1 2 March 2016
NEWS
T
heoptionofincreasingtaxondieseltocut
dangerousemissionswasdiscardedbythe
outgoinggovernmentamidconcernsofupset-
tingroadhauliersandincreasingthecostof
doingbusinessinIreland.
Asecondpossibilityofraisingcarbontaxonsolid
fuel was also ignored by then Minister of Finance
MichaelNoonanbecauseoffearsoversmugglingfrom
across the border and a possible rise in “fuel
poverty”.
Thetwooptionswerecontainedinapre-Budgetsub-
missionpreparedforFinanceMinisterMichaelNoonan
lastSeptember,whichhasbeenobtainedunderFree-
domofInformationlegislationbyVillage.
The submission on “energy and environmental
options”wasdiscussedinadvanceofBudget2016but
noneofthesuggestionscontainedwithinitwereacted
upondespitegrowingpressureonIrelandtomeetits
2020emissionstargets.
TheeconomiccostofairpollutioninIrelandhasbeen
estimatedbytheWorldHealthOrganisationat$2.5bil-
lionannuallybuttheDepartmentofFinancesubmission
suggeststhatpoliticalconcernsmayhaveplayeda
moreimportantroleinlastyear’sinternalDepartmen-
taldebate.
An Taisce said the decision not to make the tax
changesillustratedhowlittlepriorityhadbeenafforded
theenvironmentbytheoutgoing
government of Fine Gael and
Labour
CallsfromtheOrganisationfor
EconomicCooperationandDevel-
opment(OECD)for“equalisation”
ofexciseratesonpetrolanddiesel
weredisregarded,withtheDepart-
ment submission highlighting
potentially “strong opposition”,
particularlyfromroadhauliers.
The submission explained:
“Thereisasignicantdifferencebetweentheratesof
exciseonpetrolanddieselinIreland.
“Thisincreasedduringthe[economic]crisiswhen
increaseinexciseonmineraloilswereusedtoraise
revenuebutatthesametimeincreasesindieselwere
tempered inorder toprotect business as much as
possible”.
Thesubmissionsaidthatchangestovehicleregistra-
tiontaxandthedifferentrateshadnowincentivised
thepurchaseofdieselvehicles.
However,itexplained:“Itshouldbenotedthatdiesel
isadirtierfuelthanpetrolasemissionsalsoinclude
higherlevelsofnitrousoxidesandparticlematter”.
Itsaidthelowertaxrateondieselof48centperlitre
failedtotakeaccountofthe“socialandhealth”impacts
fromits useand madethreeproposals onhowthe
systemcouldbereformed.
Aplantoincreasetherateoftaxondieseltoequal
thatonpetrol(59centperlitre)wouldhaveyieldedan
extra€298millionayeartotheExchequer.
Theoppositeideaofreducingtaxonpetroltobring
itintolinewithdieselwouldhavecosttheState€172
millionannually.
Athirdidea–oflettingthetaxratesmeetathalfway
(53centperlitre)–wouldhavebroughtinanextra€65
millioninrevenueeachyear,thesubmissionexplained.
However, in the end the excise rates remained
untouchedwiththeexecutivesummaryofthesubmis-
sionexplaining: “Anyincrease inexcise[ondiesel]
wouldhaveanegativeeffectonthecostofdoingbusi-
nessintheState.
The Irish Road Haulier’s Association have cam-
paignedforareductionincostsandanyincreaseinthe
rate of excise is likely to be met with strong
opposition”.
Thesubmissionlaterexplainedthatthetaxrateon
diesel-5.5%abovetheEUaverage–alongwiththe
additionalcostsofbeinganislandstatewereaffecting
“Ireland’soverallcompetitiveness”.
JohnGibbonsofAnTaisce’sClimateChangeCommit-
tee said: “There is no justication for diesel to be
cheaper.Thissuggestionofhavingthetaxratesmeet
inthemiddlewouldhaveactuallygivenaprottothe
State”.
Proposalsforanincreaseincarbontaxwerealsojet
-
tisonedbytheDepartment.Thesubmissionexplained
thatthecarbontaxhadbeenextendedtosolidfuelsin
2012butwasnowcausingpeopletosourcefuelfrom
acrosstheborder.
Itsaid:“Arateincreasecouldleadtoanupsurgein
solidfuelsbeingsourcedfromNorthernIrelandand
furtherexacerbatetheissue”.
AnTaisce’sJohnGibbonssaiditwasabsurdfora
by Ken Foxe
Finance Department
favoured vested interests
over environment
FoI reveals official antipathy to raising
of carbon tax
It was absurd to be
setting policy on the
basis of the possibility
of illegal smuggling. We
do not apply this logic
to cigarettes
March 2016 1 3
governmentdepartmenttobesettingpolicyon
thebasisofthepossibilityofillegalsmuggling.
Hecommented:“Sincewhendowesetpolicy
likethisinresponsetopeoplebreakingthelaw.
Theanswertothis isenforcement. Wedonot
applythislogictocigarettessowhywouldwedo
itforfuel?”.
Thesubmissionalsosuggestedthatincreased
carbontaxescouldexacerbatetheproblemof
“fuelpoverty”.“AccordingtotheESRI,lowincome
householdsaremorelikelytousecheaperbut
morecarbonintensivesolidfuels”,itexplained.
However,JohnGibbonssaidthiswasawed
logicandthatallowingthepooresthouseholds
continueto usesuchfuelwasjust increasing
“healthinequality”instead.
“Ifyourconcernisforfuelpoverty”,saidGib-
bons,“thentheanswerisnotcheapersolidfuels.
Retrottingistheanswer,notcheapcoalorother
similarfuels.Wearepenalisingthesecommuni-
tiesevenfurtherwithillhealth.Itisaverypoor
argument.
“Ithinkwehaveseenfrom2011to2016,the
outgoinggovernmentneverprioritisedenviron-
mentalissues.Theywerehappytomakenoise
aboutitandgothroughthemotionsbutinterms
oftranslatingthatintopolicy,itjust
hasn’thappened”.
Athirdproposalwasalsoincluded
intheDepartmentofFinancesub-
missionforanincreasedelectricity
taxforbusinessuse.
Therateiscurrentlysetat50cent
perMegaWatthour(MWh),whichis
thelowestpermissible rate under
theEUEnergyTaxDirective.Itwas
suggested that this could be
increasedto€1.
However, the proposal, which
wouldhavegeneratedanextra€4.5millioneach
year, also slipped off the table and was not
introduced.
AsaBudgetsummaryreleasedbytheDepart-
mentofFinanceexplained:“Therearenochanges
toanyoftheratesforelectricity,mineraloil,solid
fuelcarbonornaturalgascarbontaxes”.
Askedforcomment,theDepartmentofFinance
said:“Inthecourseofpreparingforthebudgeta
rangeofoptionsarepresentedtotheMinisterfor
Financeacrossalltaxheads.Ultimately,thedeci-
siontoimplementparticularoptionsisamatter
fortheMinisterandtheGovernment”.
Calls from the OECD for
equalisation of excise
rates on petrol and
diesel were disregarded
due to potentially strong
opposition from road
hauliers
Finance officials keep open mind on carbon tax
1 4 March 2016
NEWS
Energy and Environmental options in pre-Budget submission to Michael Noonan

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