A Green Budget

Saturday 01 December 2007 20.30
Greening the VRT - This little car is expected to get a big tax break
Greening the VRT - This little car is expected to get a big tax break

Next week's Budget is expected to be heralded as the greenest ever, after Minister for Finance Brian Cowen announced that environment was one of his top three policy priorities for the future.

Paul Cunningham, Environment Correspondent, reports on what is likely to be in the Budget, what will be left out and what is still being haggled over.

The way the Government levies tax on cars is about to shift. The aim is to make people stop and think before making that purchase.

Vehicle Registration Tax used to be solely based on the size of the engine in any given car, but that is all going to change in the next Budget.

Soon, it will all be about the amount of Co2 coming out the exhaust pipe.

Environmental campaigners are welcoming the move.

Oisín Coghlan of Friends of the Earth says it is absolutely correct that if you pollute more you should pay more. However, he says those who pollute less should be rewarded.

The big question is whether the new policy will risk being radical enough to change behaviour.

Observers point to VRT delivering €1.3 billion for the Government and don't think so. Harry McGee, Political Editor of the Irish Examiner, says we'll have to see the figures that are published but from what he's hearing they will not be as punitive as some expected.

The man behind the green changes is Brian Cowen - so how else will he flaunt his green credentials?

One innovation of this new Government is 'a carbon budget' - accounting for how much Co2 we produce and how it can be reduced.

Oisín Coghlan says in the usual Budget there is a figure for each department and explanation where the money is going to come from.

In a carbon budget, there should be an over-all figure for the amount of pollution generated last year and a commitment on what is going to happen and explanations on how the Government will ensure its not exceeded.

A green tax will not be announced this year, but a Cabinet sub-committee on climate change, which includes the Taoiseach, is expected to get tough shortly.

Harry McGee says we will not see it in this Budget, but radical measures are being considered and the policy will be changing in the future.

The National Treasury Management Agency is charged with buying credits because Ireland is producing much more Co2 than allowed.

The Government has so far allocated €270m to take account of only some of the credits Ireland is going to have to buy. However the NTMA has only committed itself so far to buying €40m worth next year.

Given the significant balance remaining - coupled with the fact that the Green Party dislikes credits as they consider it 'buying your way out of the Kyoto Protocol' - this budget is unlikely to chance anything.

Given economic growth has slowed, and consumer confidence has dipped, caution will be the by-word next Wednesday.

But if the Government wants people to believe in its green fiscal credentials - then the green tax has to happen next time.

- Paul Cunningham