Climate is one of four over-arching policy objectives that should be central to the development of taxation and welfare policy in the years to come. This is the position taken by the Commission on Taxation and Welfare in its report – Foundations for the Future – released last week.
The report references the critical role of taxation and welfare systems achieving Ireland’s climate goals, as “[g]iven the economy-wide nature of the problem, taxation is a natural policy instrument to deploy in order to achieve an economy-wide reduction in emissions.”
Alongside fiscal sustainability and stability, promoting enterprise, innovation and employment, and inequality, poverty and income inadequacy, the report stated that consideration of the climate as a ‘megatrend’ is necessary. This will inform a strong strategic view of what Ireland needs the taxation and welfare systems to achieve when developing policy now for the future. The report includes descriptions of the implications of climate change, such as growing pressure on resources – particularly water – drought-based food insecurity, biodiversity loss, change in the nitrogen cycle, and the often-overlooked economic consequences of environmental pollution.
The Commission was established in April 2021 on foot of a commitment in the Programme for Government. It was asked to review how best the taxation and welfare system can support economic activity and income redistribution, while promoting increased employment and prosperity in a resilient, inclusive and sustainable way and ensuring that there are sufficient resources available to meet the costs of public services and supports in the medium and longer term. You can read the full report here.