Link to tax and climate change
A major study of tax incentives show their unintended consequences in harming the environment. The study identified that changes in transport taxes that could help air quality, according to the Economic and Social Research Institute (ESRI).
The think-tank, which looked at 142 fiscal incentives that covered lower levels of tax, tax exemptions, tax allowances and direct subsidies, on behalf of the Environmental Protection Agency, said that the fiscal measures by themselves may have little effect on changing people’s actions that affect climate change, air quality, and land pollution, but taken together can have a significant effect nonetheless.
The ESRI said the Government will now need to take more heed of the effects of a range of fiscal measures on the environment.
“The unintended environmental effects of tax breaks should be studied more carefully, as some measures have significant environmental costs. Appropriate reform of these measures could make a significant contribution to reducing Ireland’s greenhouse gas emissions and reduce local pollution,” said DCU professor of Economics Edgar Morgenroth, one of the report’s authors.
The report said the worst offenders was a cluster of 98 existing and potential tax measures as having the biggest effect on climate change and emissions.
It said that “the least common impact is on water, with just 23 measures having an impact. Just over half of these measures had a positive impact”.
“The study examines four measures in more detail to quantify their environmental impact: The difference in tax rates between petrol and diesel; VAT on fertiliser; the rebate scheme on diesel tax for the haulage industry; and the possible introduction of an air passenger duty.
“The research finds that these individual measures have a relatively small effect but they combine to produce a negative effect.
“For example, the combined negative effects of the transport measures suggest that total Irish carbon dioxide emissions could be reduced by 1.1%, nitrogen- oxide emissions could be reduced by 1.34%, and particulate matter emissions could be reduced by 1.47% if the current policies changed.
It concludes: “The study points to the importance of considering the potential environmental impact of all fiscal policy changes, in the context of Ireland’s climate change objectives.”
