Investment in our Environment and a Just Transition – priorities for Budget 2021

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Investment in our Environment and a Just Transition – priorities for Budget 2021

As we look towards the future and rebuilding our society and our economy we have the opportunity to ensure that our investment strategy reduces carbon emissions, creates a vibrant society and economy, and supports a just transition. It is vital that any recovery and stimulus packages help create a greener economy, and all support provided to companies and industries should be accompanied by stronger environmental standards. 

Tax policy and environmental goals

If a government is setting policy goals, it is important that its taxation system supports these goals. This is just as important for environmental goals as it is for economic and social ones. Any programme for sustainable development has implications for public spending. In addressing this issue, it must be understood that public expenditure programmes and taxes provide a framework which help to shape market prices, as well as rewarding certain activities and penalising others.

Social Justice Ireland has long been highlighting the need to broaden the tax base. Environmental taxation can pay a key role. Eco-taxes, which put a price on the full costs of resource extraction and pollution, would assist the transition towards a resource-efficient, low carbon economy.

It is important that the taxation system reflect the environmental and social costs of goods and services, as well as the cost of production.  With this in mind, the time has come to look at the aviation sector and the policy levers that are available to ensure that it makes a contribution to our climate targets. Jet kerosene is currently not subject to Mineral Oil Tax, yet air travel is a significant polluter. In a first step to address this anomaly Social Justice Ireland proposes the introduction of a Commercial Air Transport Tax.

When considering environmental taxation measures to support sustainable development and the environment, and to broaden the tax base, the Government should ensure that such taxes are structured in ways that are equitable and effective and do not place a disproportionate burden on rural communities or lower socio-economic groups.

The carbon tax is probably the most high profile environmental tax of the last few years. Whilst we are supportive of a carbon tax we have consistently proposed that revenues from carbon taxes are used to support households in energy poverty to improve energy efficiency, and invested in low carbon technologies to improve the energy efficiency of the housing stock. It is vital that any carbon tax is well-designed and accompanied by the necessary measures to assist people and communities to transition to low-carbon alternatives.

Another aspect of the environmental tax code that should be reviewed is the way in which elements of the code subsidise activity that is harmful to the environment. There are several tax-based subsidies within the Irish tax-code that create positive incentives, but unfortunately many more that produce negative outcomes, costing the Irish taxpayers billions of euros in the process.

Retrofitting and Energy Efficiency

Investment in retrofitting and energy efficiency should be frontloaded in the stimulus plan and Budget 2021 to promote the development of renewable energy sources and the move to a low-carbon power system by 2050. One of the most cost-effective measures of moving towards our Europe 2020 energy targets is to increase building energy efficiency. Investment in clean energy technologies creates jobs, and makes economies and societies cleaner and more resilient.

Biodiversity and Nature

Natural capital spending in areas such as rural ecosystems, biodiversity and expanding parkland are identified as fast-acting climate friendly policies that will have an immediate impact and long-term returns. We must invest in the National Parks and Wildlife Service and in the National Biodiversity Centre.

Investing in the Future—the Circular Economy

Changing to a circular economy ‘where the value of products, materials and resources is maintained in the economy for as long as possible, and the generation of waste minimised’ presents a challenge across all sectors, but bears rewards from an economic, environmental and social standpoint. Ireland should move to develop a circular economy strategy concentrating on areas such as sustainable agriculture, bio-economy and recognition of the interconnectivity between the economic, environmental and social goals.