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IRELAND pioneered the plastic bag tax. Before the levy was introduced in 2002, economic studies predicted it would reduce plastic bag consumption by about 30pc.
The original 15c charge had an immediate effect, actually reducing plastic-bag purchases by more than 90pc.
The number of shoppers using long-life bags increased three-fold virtually overnight. The levy went up to 22c five years later.
The value of the levy has not been measured in the amount of money it raised, but by the effect it has had on consumer behaviour, forcing shoppers to cut down on waste.
The cost forced a change of habit and enhanced environmental awareness. The carbon tax is the next environmental tax in the pipeline.
Nobody can claim they weren’t warned. It was included in the Programme for Government, agreed by the Green Party with Fianna Fail, and Finance Minister Brian Lenihan flagged its introduction in last year’s Budget.
The Commission on Taxation gave its blessing pushing it further over the line. The expert group on tax reform offered some valuable advice to the Government in seeking to allay public anger.
“The carbon tax should be clearly visible at the point of final consumption to ensure it is not seen as ‘just another tax’.”
The environmental merit of the carbon tax is pretty clear as it will help the country meet its targets under the Kyoto protocol to reduced CO2 emissions.
The level of carbon tax applied is linked directly to the price being put on carbon dioxide. The carbon tax basically operates off the so-called polluter pays principle. The cleaner the fuel, the lower the tax. The dirtier the fuel, the higher the tax.
The introduction of the carbon tax follows the changes to Vehicle Registration Tax and Motor Tax, which link the cost to the engine size and amount of pollution.
It enables consumers to make a choice and see the environmental cost of their options. The Government is banking on people responding to these price signals.
The problem is, in the current economic climate, the carbon tax will be seen as ‘just another tax’. It will be just another charge to be paid by already hard-pressed families.
It will be regarded as another hit on the auld reliables of petrol and diesel — the first port of call for any Minister for Finance in need of raising an easy few bob.
The ring-fencing of the proceeds from the carbon tax, similar to the plastic bag levy, will be a vital step towards public support for the tax.
Not only will petrol and diesel be affected, but also home heating oil, briquettes and coal.
Putting the proceeds into a fund to allow middle class people to insulate their homes and put solar panels on their roofs wouldn’t cut it.
The noble idea would be to ensure the money goes towards alleviating the added cost for those who can least afford it through the social welfare system.
DIRECTING the funds towards the fuel allowance, if even notionally, would engender a degree of positive feeling about the tax. Eamon Timmins, head of advocacy with Age Action, raises a valid point when he accepts the need for a carbon tax, but warns it shouldn’t come in until the necessary measures are in place to protect frail, older people already struggling to afford the energy to heat their homes.
Environment Minister John Gormley appears to accept the tax cannot be introduced in isolation, without measures for those on low incomes.
But the introduction of the carbon tax will still be a test for the Green Party’s negotiating powers over the coming months.
Bringing in the carbon tax is a priority for the junior coalition partners and would be presented as a sweetener to its membership to continue in government.
The party leadership would legitimately claim it wouldn’t have happened if they weren’t in power, as there is sufficient resistance for the Government to postpone it for another year, or two, or three.
Government sources said the carbon tax was likely to start low and be phased in over a number of years.
The objective is not to raise revenue, but to send a price signal. “It would be great to get it in there as a principle. It’s about changing behaviour,” a source said.
A 1c or 2c increase in the price of a litre of petrol is unlikely to bring about an immediate effect in car usage.
The price of petrol has fluctuated dramatically in the past 12 months and at the moment appears to hover between €1.08 or €1.18 a litre.
Were it to gradually increase to 8pc a litre in the coming year, then the impact would be more significant.
Combined with continued improvements to engine emission standards and an increased availability of grants to make homes energy efficient, the carbon tax will eventually have its desired effect.
The change won’t be overnight and it might even take a decade to see its impact. If the tax can’t come in now, then when will it?
- Fionnan Sheahan