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Speech by Minister Dempsey on Environmental Tax Reform – Learning from the Past and Inventing the Future

28 - 10 - 2010

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Environmental Tax Reform – Learning from the Past and Inventing the Future
 
28-29 October 2010
 
Opening Address by Mr Noel Dempsey TD, Minister for Transport
 
Ladies and Gentlemen
 
I am delighted to have been invited to open this workshop and to welcome you here today. A particularly warm welcome to those of you who have travelled some distance, from the European Commission, the European Environment Agency, Veolia/EUREAU, and the Ministry of Finance in Sweden.
 
I had no hesitation in agreeing to be here today. Environmental tax reform is topical across a range of sectors, in the context of sustainability, economic development, and - particularly in current times – taxes and revenue .
 
However, it is not a subject which inspires enthusiastic unanimity.  
 
It is a different way of looking at taxation
 
Individual measures require a great deal of thought around the particular resource or behaviour to be targeted, how to reliably raise revenue and change behaviour at the same time, how to deliver on the desired outcome and how to factor in all the potential effects
 
Measures that are perceived as new or higher taxes can face public resistance, even if the overall environmental goal is accepted, and particularly when the economic climate is not good
 
Across many sectors we are faced with the reality of environment impacts, whether our use of natural resources or pollution, or the reality of where current trends are taking us.
 
I’m speaking to you today as Minister for Transport, but my views on environmental taxation are, needless to say, greatly influenced by my role in a former life. In my role as Minister for the Environment from 1997 to 2002, I published Ireland’s first National Climate Change Strategy, which highlighted the potential of fiscal instruments, including, in particular, a carbon tax.   It took a remarkably long time to implement that proposal – almost 10 years, in fact – but another initiative from that time got off the ground somewhat more quickly and was an immediate and lasting success. I’m referring, of course, to the Plastic Bag Levy, which I introduced in 2002 to deal with the scourge of plastic shopping bags which at that time accounted for 5% of all litter.
 
The levy, although initially set at a modest 15c, had a dramatic effect. The use of plastic shopping bags fell by over 90%, and plastic bags now account for just 0.3% of litter pollution – a remarkable drop of 94%.
 
I don’t think that it was necessarily the amount of the levy that changed people’s behaviour in such a positive way – it may simply have been that the existence of the levy reminded the shopper on a daily basis that the use of disposable plastic bags didn’t make a lot of sense, for the shopper or the environment, when better alternatives were available. The combination of a small monetary incentive and the constant reminder to “do the right thing” delivered the result we wanted. 
 
Now, of course, I’m Minister for Transport, and there are many challenges in that sector which are equally amenable to fiscal solutions.
Notwithstanding our current economic difficulties, the remarkable transformation and growth in this country has been accompanied by a considerable expansion of the transport sector – increases in levels of car ownership and use being just one all too familiar example. 
 
When we looked at transport trends in 2009, our assessment was that, if they continued :
 
*         Car ownership could increase to beyond EU average levels
 
*         Car use will continue to increase, and commuter walking and cycling modal share will continue to decline
 
*         Average speed in urban areas in morning peak period will continue to fall, with more time spent on commuting
 
*         Increased dependence on car travel will contribute to obesity
 
*         Localised traffic pollution will cause increasing damage to public health
 
*         Increased traffic congestion will lead to a decline in competitiveness
 
*         Energy security of supply will be fragile as a result of continued dependence on imported fossil fuels in the transport sector
 
*         And greenhouse gas emissions from transport will increase
 
While the economic situation has had some impacts on the predicted trends, as we saw last week from the report on 2009 Greenhouse Gas emissions, we see this as a slowdown given current conditions but not as a reversal.
 
The reality of where the transport sector was headed drove the adoption of a new transport policy in 2009, called Smarter Travel, which took a sustainability perspective on the period up to 2020
 
The development of that policy demonstrated for me the complexity of both the idea of sustainability and the transport sector, and underlined that there are no easy solutions. Smarter Travel has tried to capture the web of relationships between spatial planning, employment policies, mobility management, the movement of goods, public transport, cycling and walking, roads, car use, and not forgetting the aviation and maritime sectors.
 
Among the variety of Actions agreed to address sustainable transport is of course fiscal measures
 
All of us know that there is a relationship between cost and demand, and we also know that the price charged for something does not always reflect its true cost and impacts.
 
When the subject of fiscal measures comes up for transport, a list of candidates comes quickly to mind – congestion charging, fuel duties, carbon tax, vehicle registration and use charges, parking, road tolls and air travel. A discussion on the complexities and implications of any one of these is for another time, but another element that we can factor in is the idea that change can also be prompted by increasing the attractiveness of alternatives.  
 
For example, if we ask the question of how to develop public transport so that people use their car less. The answer isn’t just about providing the public transport infrastructure, its about getting a high volume of use. And that could be about lower prices, better connectivity, facilities at stations. A good example of the need to know what drives people’s choices and how can we influence them
 
That’s just part of what this forum is about today. The focus is on the practical – what has worked in particular examples of environmental charges and why, and what might be possible going forward. Such an approach is an attractive one for forum, and is to be commended.
 
The collaboration of the organisers - the European Environment Agency, UCD Earth Sciences Institute and Comhar Sustainable Development Council - has brought together a very interesting session today, and an equally interesting open session tomorrow which will be addressed by my colleague, Minister Gormley.
 
Plenty of food for thought can be expected in the presentations and discussions on water, waste water, greenhouse gases and land value tax. I also particularly welcome the opportunity to hear the perspective of the European Commission on enabling environmental taxation at Member State level
 
Many of us in the room today have responsibilities for developing and implementing policies which have long-term implications, economically, environmentally and socially, and a responsibility to do our best to get the right balance. An informed, open-minded, adaptable and responsible approach is part of what is required of us, and today’s workshop will both challenge and inspire us.
 
You have a full day ahead of you, and no doubt you are impatient to get into it. I hope you have a thought-provoking session, and wish the organisers every success for both today and tomorrow.
 
 
ENDS
 
 
 
 

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