CAR DRIVERS should pay higher road tax, with the extra revenue used to make commuting by public transport tax deductible, according to an Economic and Social Research Institute report.
It says the costs of urban parking should be increased, through increased charges at parking meters, as well as basing local authority rates on the number of car parking places in a premises and removing the tax breaks for building multi storey car parks.
The ESRI report also proposes that the full cost of providing water, sewerage and waste disposal facilities should be recovered from households, business and industry. "In general, these services are being underpriced, leading to overuse and wastage."
The report recommends that full cost recovery should be gradually implemented over a period of 10 years by means of "volume related charges", such as water meters. This would save the Government £214 million annually, after low income households are compensated.
"The objective implicit in our proposed fiscal reforms will be to ensure that polluters are made to pay the full costs of their actions the report says, adding that this could generate over £900 million a year, which could be used to reduce other taxes, such as PRSI.
The report, The Fiscal System and the Polluter Pays Principle, puts forward a range of other green" taxes and incentives, arguing that these would be more effective in protecting the environment than reliance on the use of regulations alone.
The bulk of the extra revenue - some £700 million annually - would come from a broad energy tax, along the lines of a carbon tax proposed by the European Commission. This should be introduced unilaterally in advance of agreement on an EU wide tax, the report says.
Its authors argue that VAT on heating fuels - including gas and electricity - should be raised from 12.5 per cent to the standard rate of 21 per cent, with compensating social welfare payments to the less well off. This would raise £45 million per annum, they say.
The report also recommends that stamp duty should apply to all houses and that the present exemption for new houses be abolished.
Grants and reliefs for the renovation of buildings should be extended, "especially in the case of listed buildings", they argue, saying that the preservation of such buildings is "thwarted" by the present fiscal discrimination in favour of new construction.
Dealing with the growing problem of air pollution from road transport, the report recommends increasing the tax advantage of less polluting fuels.
Road tax should be based on the fuel efficiency of vehicles rather than cubic capacity, according to the ESRI. In addition, it recommends that the tax on heavy goods vehicles should be based on laden weight per axle, recognising the damage they do to road surfaces.
Referring to the environmental pressures caused by the doubling of tourist numbers, the ESRI favours higher taxes on accommodation in the peak season.
In the agricultural sector, the principal recommendation is that VAT should be imposed on fertiliser's and animal feed to tackle the serious problem of eutrophication (over enrichment) of rivers and lakes from the excessive use of nutrients, such as phosphorus.
A radical change in forestry policy is also advocated by the authors, with subsidies switched to the value of forests as "carbon sinks" and wildlife habitats. The authors estimate that this would cost £200 million, the same as current subsidies for afforestation.
The 223 page report was compiled by three ESRI economists, Mr Alan Barrett, Mr John Lawlor and Ms Sue Scott, and is published by Ashgate, price £37.50.
