DUBLIN — Over the last three years, with its economy in tatters, Ireland embraced a novel strategy to help reduce its staggering deficit: charging households and businesses for the environmental damage they cause.Of course they're politically toxic. Can political elites be more stupid?
The government imposed taxes on most of the fossil fuels used by homes, offices, vehicles and farms, based on each fuel’s carbon dioxide emissions, a move that immediately drove up prices for oil, natural gas and kerosene. Household trash is weighed at the curb, and residents are billed for anything that is not being recycled.
The Irish now pay purchase taxes on new cars and yearly registration fees that rise steeply in proportion to the vehicle’s emissions.
Environmentally and economically, the new taxes have delivered results. Long one of Europe’s highest per-capita producers of greenhouse gases, with levels nearing those of the United States, Ireland has seen its emissions drop more than 15 percent since 2008.
Although much of that decline can be attributed to a recession, changes in behavior also played a major role, experts say, noting that the country’s emissions dropped 6.7 percent in 2011 even as the economy grew slightly.
“We are not saints like those Scandinavians — we were lapping up fossil fuels, buying bigger cars and homes, very American,” said Eamon Ryan, who was Ireland’s energy minister from 2007 to 2011. “We just set up a price signal that raised significant revenue and changed behavior. Now, we’re smashing through the environmental targets we set for ourselves.”
By contrast, carbon taxes are viewed as politically toxic in the United States. Republican leaders in Congress have pledged to block any proposal for such a tax, and President Obama has not advocated one, although the idea has drawn support from economists of varying ideologies.
It turns out that all is not well in Ireland:
Not everyone is happy. The prices of basic commodities like gasoline and heating oil have risen 5 to 10 percent. This is particularly hard on the poor, although the government has provided subsidies for low-income families to better insulate homes, for example. And industries complain that the higher prices have made it harder for them to compete outside Ireland.Keep reading.
“Prices just keep going up, and a lot of people think it’s a scam,” said Imelda Lyons, 45, as she filled her car at a gas station here. “You call it a carbon tax, but what good is being done with it to help the environment?”
The coalition government that enacted the taxes was voted out of office last year. “Just imagine President Obama saying in the debate, ‘I’ve got this great idea, but it’s going to increase your gasoline price,’ ” said Mr. Ryan, who lost his seat in the last election and now leads the Green Party. “People didn’t exactly cheer us on.”
Taxes are added by as much as 36 percent of a car's market price at the point of sale, factored into the sticker price. And additional taxes are billed directly to drivers, often adding thousands of dollars to annual vehicle operating costs. And because people at lower incomes are less able to afford newer cars with all the latest "green" technologies, the tax system is heavily regressive. But read the whole thing. You can bet Ireland's experience will be touted as a model for radical environmentalists here at home, and folks in Washington (the progressive political class) have been talking about all kinds of alternative taxes systems, such as value added systems. Unless Americans start turning back toward freedom and free markets, such schemes will be increasingly a part of our lives as well, with the least well-off bearing the brunt of the impoverishment and with our overall standard of living imperiled.