Tax policy should place a far stronger emphasis on promoting environmentally sustainable development, the National Economic and Social Council (NESC) has said.

In the complete text of its report on economic and social strategy for the period from 2000 to 2002, the council says it believes that environmental taxes, charges and incentives have a role to play in addressing environmental issues.

It notes that transport is one of the key sources of the growth in greenhouse gas emissions, while a wide range of other environmental problems, including local air pollution, accidents and soil and water pollution, are also associated with it.

But the damage or costs imposed by increased transport activity are not borne directly by transport users. "Transport taxes should be restructured to give more accurate signals to transport users regarding these costs," the NESC report says.

On environmental services, such as water supply, water treatment and the disposal of solid waste, the report says that user charges should more adequately reflect the cost of providing the service and should be volume-based where possible.

While acknowledging that such charges have proved contentious in the past, the council says there is survey evidence that more than 95 per cent of the public would prefer to pay for improved environmental services through charges rather than through higher taxation.

However, it advises that the movement towards charges for the cost of recovery be preceded by a process of consultation. It also stresses the importance of the public being able to see a clear link between charges and improved service provision.

In relation to water, it says charges are only likely to support conservation if they are based on metering. It recommends that a study be undertaken into the feasibility of introducing universal metering in those areas in which water supply is in greatest demand. In general terms, the council said it was "strongly committed" to urgent action to meet the Republic's obligations under the Kyoto Protocol, including limiting the growth of greenhouse gases to 13 per cent over the period 2008-2012.

It welcomes the consultation process on how best to address the challenges of Kyoto. Although action is now underway, greater urgency is required, the council says.

The report also suggests that the institutional arrangements and the deployment of resources within and between relevant departments should be improved.

NESC advises the Government on the development of the economy and provides a forum for debate between government departments, employers and the trade unions. Its recommendations on personal taxation were broadly as outlined in an overview of the report published in November.

It recommends raising the level at which people enter the tax system through increases in the standard-rate tax allowances, and raising the level at which people become liable for the higher rate of taxation by widening the standard-rate tax band. It also criticises the proliferation of new forms of tax relief without any obvious guiding principle, proposing that a stronger line should be taken against tax evasion and that a strategic review be undertaken of the adaptability of the tax and social welfare systems to changing economic and social conditions.