VAT on carbon tax is 'a tax upon a tax' warns Farrell

'Evidence does not show carbon tax is an effective way of changing behaviours,' says councillor

Sinn Féin Galway City East councillor Mairéad Farrell.

Sinn Féin Galway City East councillor Mairéad Farrell.

Any hike in the current rate of carbon tax will attract VAT resulting in citizens paying 'a tax upon a tax', Sinn Féin Galway City East councillor Mairéad Farrell has warned.

The possibility of VAT being placed on future carbon tax hikes was confirmed to Sinn Féin in a parliamentary question this week, leading Cllr Farrell to warn that any such increases "will disproportionately punish those on low and middle incomes" while big business and "corporate polluters" will not be made to pay their fair share.

In support of this she pointed to studies undertaken by the ESRI in 2008 and 2018 which stated that a universal carbon tax would disproportionally harm lower income households. She also accused the Government of failing to provide any meaningful alternatives to citizens to "enable behavioural change" and of "passing the buck to households for its policy failures".

Carbon tax was introduced in 2010 at €15 per tonne of CO2 emissions by the Fianna Fail/Green Party coalition. That was increased in 2013 to €20 per tonne of CO2 emissions by the Fine Gael/Labour coalition. Despite this, carbon emissions have increased since then.

“We need to tackle the catastrophic reality of climate change in a fair way," said Cllr Farrell, who has called on the Government to invest in free insulation and retrofits; making electric cars affordable and developing the charging infrastructure; and public transport expansion and fare reductions.

“These programmes are not on the agenda for the Government as it fixates on increasing carbon taxes," said Cllr Farrell, "even though the evidence does not show it is an effective way of changing behaviours especially without alternatives being put in place.”

Cathal Ó Conchúir. Sinn Féin Galway City West councillor, Cathal Ó Conchúir, said carbon tax "merely provides the illusion of doing something", and pointed out that the fossil fuel industry supports such taxes. "It allows them to wash their hands of having responsibility for carbon emissions rather than asking them to come up with solutions," he said.

Cllr Ó Conchúir said carbon emissions can be reduced through retrofitting 50 per cent of the housing stock with a Building Energy Rating of D or lower and on all houses built before the year 2000. He also called for the development of photovoltaic solar systems along with macro and micro hydro solutions.

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