Jack Quann
Jack Quann

07.36 6 Jun 2019


Share this article


Poorer people will be worst hit unless a carbon tax here is well-designed.

A new article from the Economic and Social Research Institute (ESRI) has claimed that, as poorer households spend more of their income on energy than richer people, carbon tax is regressive.

While researches said a well-designed carbon tax could reduce emissions and alleviate income inequality.

They have found that carbon taxation has "an impact on both carbon emissions and on income inequality."

Using data from the Household Budget Survey (HBS) from  2015-2016 - and methods to simulate how much people would buy once a carbon tax was applied - it is estimated a reduction of carbon emissions by 3.9% for a carbon tax increase of €30 per tonne, and by 10.2% for a carbon tax increase of €80 per tonne.

"Poorer households spend a greater proportion of their expenditure on energy, and therefore on carbon tax, than richer households", the ESRI said.

"Carbon taxation is therefore found to be regressive.

"However, if the revenues raised by the tax are returned to households, the overall negative effect on income distribution can be corrected."

It said that if every household is allocated an equal share of the revenues from the carbon tax, income inequality is reduced by 0.5% and 1% - when compared with the overall income inequality of a no tax scenario.

If the revenues are recycled in a manner that targets poorer households, it said that inequality is reduced even more - by 1.2% and 2.8%.'

'Congestion charge'

The research article added: "Further reductions in carbon emissions could also come from new policy measures, such as congestion charging or improved public transportation.

"Such measures would influence the degree to which consumers switch from high carbon consumption to lower carbon alternatives".

The article's author, Miguel Tovar Reaños, said: "This research finds that environmental and distributional policy goals are not necessarily in conflict if the policy is designed correctly.

"Using Irish data, we confirm that carbon taxation is an effective way of reducing carbon emissions, which has been found to be the case in other jurisdictions worldwide.

"The existing tax and social welfare system is the obvious way to recycle the revenues in a targeted manner.

"This is also likely to be cheaper to administer than a 'carbon cheque'.

"Forthcoming research will discuss how to cycle the revenues through the tax and welfare system for Ireland."


Share this article


Read more about

Carbon Tax ESRI Economic And Social Research Institute Household Budget Survey Income Inequality Miguel Tovar Reaños Poorer Households Regressive

Most Popular

Live: Title

Now playing

00:00:00 / 00:00:00
Added to queue
Removed from queue

On Air

Share

Share


Up next

Episode title
Show
Duration

You currently have no podcasts in your queue.

Go to podcasts

On Air

Best Of Newstalk

Best Of Newstalk

00:00-07:00

Share

Up next

In Case You Missed It

In Case You Missed It

07:00-08:00

Share

NEWSTALK BREAKFAST WITH SUSAN...

NEWSTALK BREAKFAST WITH SUSAN KEOGH

08:00-09:00

Share

THE HOME SHOW WITH SINEAD RYAN

THE HOME SHOW WITH SINEAD RYAN

09:00-10:00

Share

DOWN TO BUSINESS WITH BOBBY KE...

DOWN TO BUSINESS WITH BOBBY KERR

10:00-12:00

Share

FUTUREPROOF WITH JONATHAN MCCR...

FUTUREPROOF WITH JONATHAN MCCREA

12:00-13:00

Share

OFF THE BALL

OFF THE BALL

13:00-17:00

Share

TECH TALK WITH JESSICA KELLY

TECH TALK WITH JESSICA KELLY

17:00-18:00

Share

SCREENTIME WITH JOHN FARDY

SCREENTIME WITH JOHN FARDY

18:00-19:00

Share

The Barry Egan Tapes

The Barry Egan Tapes

19:00-20:00

Share

BETWEEN THE LINES WITH ANDREA...

BETWEEN THE LINES WITH ANDREA GILLIGAN

20:00-21:00

Share

DOCUMENTARY AND DRAMA ON NEWST...

DOCUMENTARY AND DRAMA ON NEWSTALK

21:00-22:00

Share

BEST OF THE PAT KENNY SHOW

BEST OF THE PAT KENNY SHOW

22:00-23:00

Share

BEST OF THE HARD SHOULDER

BEST OF THE HARD SHOULDER

23:00-00:00

Share

BEST OF NEWSTALK

BEST OF NEWSTALK

00:00-07:00

Share

00:00:00 / 00:00:00

Share on