Businesses will be given tax breaks for investing in energy-efficient equipment as part of a "green" Finance Bill published by the Government yesterday. Laura Slatteryreports.
The proposal by Minister for Energy Eamon Ryan to encourage companies to buy energy-efficient lighting, motorised equipment and building energy management systems has been included in a Bill that Minister for Finance Brian Cowen said was designed to be environmentally as well as economically sustainable.
The Finance Bill gives legislative effect to measures announced in last December's budget, but also closes several tax loopholes and includes a range of new policies.
These include stronger powers of investigation for the Revenue Commissioners, reduced VAT on non-oral contraceptives and tax allowances for caravan parks and camping sites aimed at tourists.
The energy-saving tax incentive was welcomed by Green Party finance spokesman Dan Boyle, Fine Gael energy spokesman Simon Coveney and business group Ibec. However, Labour Party finance spokeswoman Joan Burton said the uncosted tax break broke a previous promise by the Tánaiste that tax expenditure would be fully costed.
The tax break, which will run for a trial period of three years, allows businesses to fully write off against tax the cost of any eligible equipment in the year of purchase.
Mr Ryan said companies were often tempted to opt for the cheapest equipment, but that this was a false economy. "Businesses wishing to improve their cash flow, save in long-term energy costs and reduce their carbon emissions can do so in one fell swoop by availing of this new incentive," he said.
Mr Cowen said the incentive was a "pump-priming" exercise that would help companies improve their competitiveness as well as reduce carbon emissions. The cost to the Exchequer would depend on the take-up and the Government would encourage "the biggest possible take-up".
The incentive will come into effect when EU State-aid approval is secured, while the list of approved equipment will be drawn up by Mr Ryan's department in conjunction with Sustainable Energy Ireland. It is expected to be published within the next two months and will closely follow a model operated by the Carbon Trust in the UK.
Companies must spend at least €1,000 on motorised equipment, €3,000 on lighting and €5,000 on building energy management systems to qualify for the allowances, but there is no cap.
Under another measure designed to encourage carbon-friendly business practices, carbon credits will now be recognised as "qualifying assets" that can be securitised and traded on financial markets.
This will make it easier for Irish companies to trade carbon emission allowances in the global carbon market and allow the Republic to become a leading centre for carbon credit trading, according to Financial Services Ireland (FSI).
Brendan Kelly, the FSI's deputy director, said allowing the securitisation of carbon credits had no cost to the Exchequer but provided a valuable source of funding for investment in green technology.
But Ms Burton said the trading mechanism would have to be "carefully monitored to ensure that it doesn't become another playground for speculators".
Businesses account for 17 per cent of the Republic's carbon emissions. Mr Coveney said the Finance Bill was a "welcome first step" in cutting emission levels but the Government should lead by example by using more renewable energy in public sector buildings.
