Minister Ryan will shortly introduce a carbon windfall levy.
Generally, windfall taxes should be avoided as they are arbitrary expropriation of private property. In this case, however, I fully agree with the minister. Property rights on carbon dioxide emissions were created a few years ago. Although these rights used to belong to we the people, the European Union decided to give the permits, for free, to selected companies. This is tantamount to a subsidy worth billions of euros per year. Minister Ryan has now decided, rightly, to claw back this subsidy.
Obviously, it is a bit silly to tax a subsidy. However, the subsidy is cast in stone (an EU directive). So, I even forgive the minister the administrative inefficiency.
Note that a windfall levy on grandparented permits would also remove the legal objections that were raised against the carbon tax in France. Recall that the proposed carbon tax in France was very similar to the actual carbon tax in the Republic of Ireland.
An attentive reader pointed me to the final sentence: “This levy is essential, if we are to reduce Ireland’s overall energy bill. Having discussed it with those in the industry, I am satisfied that it will function effectively.”
Ireland’s overall energy bill will increase because of this tax, because one of its key inputs (capital) has become more expensive.