Finance Minister Charlie McCreevy has confirmed that the Government has decided not to introduce a carbon tax. The tax had been part of a plan to reduce greenhouse gas emissions as part of the Kyoto agreement.
In a statement, the Minister said that after an extensive consultation process, the Government had concluded that the tax was 'not an appropriate policy option'.
Mr McCreevy said the carbon tax would have led to a maximum reduction of just over 0.5 million tonnes per year in emissions. Ireland's overall reduction under Kyoto is set at around nine million tonnes a year.
The Minister said the Government would now intensify action on non-tax measures under the National Climate Change Strategy, which includes plans to expand renewable energy, promote greater energy efficiency and reduce emissions from agriculture.
'We concluded that the environmental benefits would not justify the difficulties that would arise, particularly for households, from the introduction of such a tax,' said Mr McCreevy, adding that the Government could not ignore the recent rise in oil prices.
The carbon tax would have involved new taxes on natural gas, coal and peat and higher taxes on petrol and diesel. It was opposed by many business groups on the grounds that it would hit competitiveness.
The statement from Mr McCreevy said the tax was likely to have some adverse economic and social effects that would not be dealt with by compensatory measures. It also pointed out that it would increase prices of many products which had already risen sharply.
Business groups IBEC, the SFA and the Chambers of Commerce of Ireland welcomed the move, but opposition parties and environmental groups reacted angrily to the decision.
