Chartered Accountants Ireland (CAI) has urged the Government to commit to using all revenue generated from carbon taxes in future to finance climate action initiatives as it sets off on the path to net-zero emissions by 2050.
Minister for Finance Paschal Donohoe pledged in his last budget speech last October that the estimated €238 million generated from carbon tax increases in 2020 and 2021 would be ringfenced for investment in residential and community energy efficiency, targeted social protection initiatives to prevent fuel poverty and pilot environmental programmes in agriculture.
“We recommend that all revenues generated from increasing carbon tax continue to be allocated to climate change initiatives,” the CAI said in its latest annual position paper on matters affecting businesses and the economy.
Businesses, particularly small- to medium-sized enterprises (SMEs) have a crucial role in meeting the net-zero target in reducing emissions by 50 per cent, but will only be able to deliver if they are “supported by the right policy framework”, the report said.
“In ‘greening’ the tax system, Chartered Accountants Ireland calls for the Government to take a long-term approach and provide certainty in terms of environmental tax policy, which will help drive business investment decisions in this area,” it said. “Tax policy must be aligned clearly with decarbonisation objectives, which should achieve the desired result of steering investment and consumption choices in favour of low-carbon alternatives.”
Red tape
The CAI, which represents 30,000 chartered accountants, states that while greater government intervention in the economy may be necessary in the wake of the pandemic, it does not need to result in increased complexity or red tape which constrains business growth.
"Government in the future will be bigger. There will be more regulation, more direct government intervention, greater accountability," said Brian Keegan, director of public policy at the CAI. "Government and its agencies collaborated with business better in the last 18 months than before. As supports are withdrawn, a continuation of this partnership-based approach would position Ireland's SMEs strongly for growth."
