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Dublin: 18 °C Wednesday 24 July, 2019
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Carbon tax model that pays money back to households to be discussed

The Green Party is hosting today’s discussion in Leinster House featuring Irish and international experts.

Households would face increased costs but would also receive tax rebates.
Households would face increased costs but would also receive tax rebates.
Image: Shutterstock

POLITICIANS IN LEINSTER House will today hear representations from Irish and international experts about a carbon tax model that would see households receive a dividend from taxes collected from fossil fuel companies.

The carbon fee and dividend model was adopted in Canada last year and Professor Kathryn Harrison from the University of British Columbia will be in Dublin to outline the Canadian experience of its implementation.

The model sees taxes on carbon levied on polluters based on the amount of pollution produced, with the levy then increasing each year for a set number of years.

With the revenue raised from the tax, households would be paid a rebate that is designed to be greater than any increased costs they may face from the levy (from the tax itself, but also from any increases to household costs because of companies passing on the charge to consumers).

The dividend would be paid based on the number of persons in a household with a slightly lower figure per child.

Companies that face increasing costs from the levies could potentially pass those costs onto consumers but Green Party leader Eamon Ryan says only households with heavy carbon usage are likely to be hit more than the rebate they receive.

“The revenue that you’d get from it, we would like it redistributed it in its entirety to every householder. And the research that the ESRI has done says it’s actually a net cash benefit to every house. Particularly those on lower incomes because they tend to consume less and have lower emissions,” said Ryan, who’s chairing today’s event.

There’s still a price you’re paying slightly more but the cash revenue back to the household covers most of that cost. There’ll be a small percentage of houses, about 6-8%, who would maybe, because they’re commuting huge distances or have an incredibly inefficient heating system, who might be net cash losers, but 95% of houses it’s actually a cash benefit.

A representative from international advocacy group Citizens’ Climate Lobby will also be making presentations during today’s Leinster House meeting.

The group has made the advancement of the carbon fee and dividend model one of its primary goals and has argued that it also has the potential to stimulate the economy.

The Citizens’ Climate Lobby argues that the model makes renewable energy sources more competitive and is relatively cheap to implement.

Source: Citizens' Climate Lobby/YouTube

The Greens have met with the Department of Public Expenditure and Reform to discuss the model and Ryan says his party believes it could be implemented in an “efficient, low-cost and effective” way using both the tax and social welfare systems.

Ryan adds however that the system should only be implemented as part of a package of climate action measures that would, for example, give people in rural areas “a really high-quality bus service at the same time”.

“We think it’s important to give the signal that there is a price on pollution and that’s why this is in two parts. It does say pollution is not without a cost but with the dividend at the end of it, it’s not there as a revenue raising exercise or punitive measure, it’s a way of making it easier people to switch, to do the right things and the more they switch the more they save.”

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Rónán Duffy

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