Budget 2019: Three key steps to avert climate catastrophe and solve housing crisis

The Government can take real action to tackle out of control emissions and an unacceptable housing crisis by adopting three common sense taxes in Budget 2019, says Ireland’s largest environmental coalition.
The Environmental Pillar has called on the cabinet to support three tax policies that will protect our environment, tackle the escalating housing crisis and bring in additional revenue, namely:

  • A Carbon Tax to hit emissions and fuel the just transition to a low-carbon economy
  • A Site Value Tax to tackle rampant land hoarding and empty properties
  • A Diesel Levy boost to match petrol and address air quality and health risks

Carbon Tax
Last month, the Taoiseach said that Budget 2019 will include an increase in the carbon tax to help Ireland meet its obligations in tackling climate change. [1]
The Climate Change Advisory Council recommends that the carbon tax be raised to €30 per tonne in Budget 2019 as an “essential component” in achieving a low-carbon transition by mid-century. [2]
We feel, however, that it needs to start at €70 in 2019 and rise by €5 a year to be effective, with half of the revenue going straight back to the people of Ireland in a carbon dividend shared to every adult.
The other half should go to a Just Transition or Climate Action Fund to ensure that workers and communities are protected during the move away from peat and coal, as well as funding retrofitting and other energy saving measures.
Site Value Tax
Figures from the 2016 Census show that there are at least 180,000 vacant homes across Ireland, with new data pointing to almost 200 sites and properties worth millions lying empty in Dublin. [3][4]
All this amid a housing crisis, where 10,000 people, including many children, are currently homeless. A site value tax would go some way to tackling this issue.
The traditional property tax on both the land and the building discourages the land owners from investing in the development of land or construction on it.
Under this model, the higher the value of the building or improvement, the higher the tax you pay. In this way, developers are encouraged to leave a site or building as it is, inevitably encouraging urban sprawl.
A tax on the potential value of land would instead encourage the efficient use of land as investment in real estate, such as building for high density in Dublin, does not lead to a higher tax bill. Farms and amenity land would not be included in a site value tax. [5] [6]
Diesel Tax
While we wait for the Government to take steps to promote lasting policy on public transport, cycling and walking infrastructure, a tax hike may help stave off some of the health risks from diesel emissions.
Diesel is currently charged at 11c less per litre than petrol and Ireland has one of the highest percentage sales of diesel cars in Europe.
We have already been told by the OECD that this preferential tax rate has “little economic, social or environmental rationale”, while the European Commission has warned us to even out this “environmentally unjustified” gap. [7] [8]
Last July, the Department of Finance’s tax strategy group itself found that dieselisation is a “growing issue” that, if left unaddressed, will “result in negative environmental and health outcomes”. [9]
More recently, the Economic and Social Research Institute found that increasing the excise duty on diesel to the level of petrol could bring in €500 million a year and also reduce dangerous emissions. [10]
Charles Stanley-Smith, the budgetary spokesperson for the Environmental Pillar, said:
“A carbon tax is a lever that we can pull immediately to support the State’s long-term targets such as the retrofitting of 45,000 homes by 2021 and getting 500,000 electric cars on Irish roads by 2030.
“Ireland is facing multimillion euro fines from Europe if we do not meet our binding climate targets so we can either have a carbon tax and reduce the amount of fines we are to pay or we can face higher fines that the average Joe will ultimately have to dig into his or her pocket to pay.
“If implemented correctly, a site value tax could also be a game-changer in dealing with the escalating housing crisis currently facing our country.
“This tax would ensure that developers and landowners are dissuaded from hoarding land and leaving buildings empty, and encourage them to build for high density in our cities and towns”
Oisin Coghlan, the budgetary spokesperson for the Environmental Pillar, said:
“Alongside carbon emissions, diesel vehicles emit nitrogen oxides and particulates. We know that particulates are significant carcinogens, and many lives are lost every year because of them.
“In the past five years science has also linked these particles to Alzheimer’s, slower brain development in children and heightened risk of diabetes and preterm births.
“Last year, we expected to at least see some moves toward disincentivising diesel use given the growing body of evidence on the damaging impact of its use on our climate and health.
“In the end, there was nothing in the budget to reflect the urgency to remove the beneficial treatment diesel fuel enjoys in our country.
“Budget 2019 needs to do something to try and change that, not just for our planet but for the health of the Irish people here and now.”
[1] The Green News, 2018. Carbon tax to be included in Budget 2019, says Taoiseach: https://goo.gl/kytS8T
[2] Climate Change Advisory Council Annual Report 2018: https://goo.gl/i11JtK
[3] Department of Housing, Planning and Local Government, 2018. National Vacant Housing Reuse Strategy: https://goo.gl/nQfRGC
[4] The Irish Times, 2018. Dublin’s hundreds of multimillion-euro empty sites and properties: https://goo.gl/Uf3nr4
[5]Smart Taxes, 2012. A Submission to the Inter-Departmental Group on Property Tax: https://goo.gl/bE4jRv
[6]Environmental Pillar Submission on Site Value Tax 2012: https://goo.gl/zE6yas
[7] European Commission, 2017. European Semester: Country Report – Ireland: https://goo.gl/VSaqTZ
[8]Organisation for Economic Co-operation and Development, 2018. Economic Surveys Ireland: https://goo.gl/7KPWcN
[9] Tax Strategy Group, 2017. Energy and Environmental Taxes: https://goo.gl/mDRcX3
[10] Economic and Social Research Institute, 2018. The Environmental Impact of Fiscal Instruments: https://www.esri.ie/pubs/BKMNEXT351.pdf