Council urges State to introduce carbon tax

A CARBON tax which would add 5c to the price of a litre of petrol would help to promote alternative fuel use and compensate low-income families hit by rising energy costs.

That’s according to sustainable development council Comhar, which said a carbon tax could lead to economic growth and urged the Government to introduce it immediately.

Any revenues raised through the tax should be used to reduce income tax, compensate low-income groups and promote emissions-saving activities, according to Comhar.

The council recommended a tax of €20 per ton of CO2 emitted — the equivalent of about 5c per litre of petrol — over the coming year. This would raise €550 million per year.

The Government has committed to a reduction of 3% per year, on average, in greenhouse gas emissions between now and 2012, and pledged at international level to cut Ireland’s emissions by at least 20% by 2020.

Comhar’s director of research, Dr Lisa Ryan, said the immediate introduction of a carbon tax would act as “a clear price-signal” to consumers that CO2 emissions targets must be met.

“The incentive for introducing a carbon tax has been strengthened because of the economic downturn and the revelation that Ireland’s carbon emissions are going to be far higher than expected over the next five years. We need to act now to make sure we can meet our climate change targets. We also need to view the introduction of a carbon tax as an opportunity to stimulate our flagging economy.”

Comhar believes that 40% of revenue raised through a carbon tax should be used to reduce income taxes.

According to the council, the revenue could be used to reduce income tax and social insurance contributions, increase welfare payments or give a lump sum to all households.

The remainder of the carbon revenue should be invested in “public good activities” to further reduce greenhouse gas emissions, said Comhar, including investment in developing alternative energy sources and energy efficiency schemes.