The newly established Commission on Taxation is to examine the need for a levy on carbon emissions.

Minister for Finance Brian Cowen established the body today.

One of the most difficult subjects the commission will tackle is carbon tax. In order to make sure that a carbon levy would not add to inflation, other taxes would have to be reduced.

The Labour Party said it is disappointed the commission had not been asked to look at the implications of a carbon tax on those with low incomes.

The Green Party has dismissed that complaint. It said low income families would be taken into account in the context of any new tax.

That could mean adjusting the fuel allowance or social welfare payments to compensate for more expensive fossil fuels.

The new commission will be chaired by Frank Daly who is currently chairman of the Revenue Commissioners.