Environment taxes proposed

Major fiscal reforms - including "dozens of new taxes" - will be required to ensure better protection of the environment, a conference in Dublin heard yesterday.

The conference heard Irish and European politicians and environmentalists discuss how the public could be encouraged - financially - to become more conscious that the environment was "not a free asset".

The Minister for Finance, Mr McCreevy, has indicated environmental fiscal reform, a system of financial incentives such as the agricultural Rural Environmental Protection Scheme and penalties in the form of taxes, will be introduced by the end of 2004.

Yesterday, Mr Michael Smith of An Taisce, which jointly hosted the conference with the European Environment Bureau, said the aim of fiscal reform was to "tax bads, not goods" and create a system where all environmentally adverse subsidies were eliminated.

The urgency of this was, he said, reflected in the fact that the Republic had greenhouse gas emissions that were, per head of population, 60 per cent higher than the EU average.

Mr Richard Bruton of Fine Gael said details on how the taxes and subsidies should be balanced and Government thinking on the issue should be published in a "green paper" to allow all sections of the community to contribute. However, he warned of the need for the State's "small open economy" to remain competitive.

He agreed with Mr Smith that a move towards environment taxes - which he said included carbon taxes, energy and possible land use taxes - would have to be "fiscally neutral" in that it should not cause unemployment or lack of competitiveness.

This was echoed by a former Greek finance minister and EU Environment Commissioner, Mr Yannis Paleocrassas, who said that as taxes on environment are increased, taxes on labour should be decreased.

However, Mr John Lawlor of DKM Economic Consultants told the conference there would be a net charge of environmental reform which would have to be paid for by taxes. He said the rescinding of water charges was "possibly the worst political decision in memory".

Ms Susan Scott, of the Environment Policy Research Centre at the Economic and Social Research Institute, outlined scope for reform of agriculture and forestry with "smart taxes on fertilisers and pesticides" . She also said there was scope for:

• Carbon taxes with a corresponding reduction on labour taxes

• Auctioned permits for emissions

• Rationalisation of the value- added system to reduce levels of VAT on environmental friendly processes and increase VAT on "unfriendly" processes

• Grant-aid energy efficiency measures in low-income homes

• Restructure of vehicle and fuel taxes

• Bring in place-of-work parking charges, road taxes and increase taxes on heavy goods vehicles which damage roads

• Rebalance incentives towards renovation and infill building as against new building and greenfield sites.