Budget Reaction: U-Turn on property tax ";monumentally shortsighted";.

Changes to car number plates a "regressive gimmick"
Changes to car tax and carbon tax welcome
Retrofitting target welcome but measures inadequate

Property Tax
The Government's u-turn on property tax, opting for a market-value-tax rather than the promised site-value-tax is "monumentally shortsighted" according to Friends of the Earth. The environmental justice group claims it contradicts and undermines the Government's plan, reiterated by Minister Howlin today, to retrofit 100,000 homes a year from now to 2020.

The new property tax will penalise householders who invest in insulation and other retrofitting, by exposing them to a higher tax liability. This when there is huge potential for job creation, energy cost-savings and emissions reductions in retrofitting.

A site-value tax is what is in the MOU with the Troika and is the commitment in the Fine Gael / Labour Programme for Government. The Government commissioned expert-review (the Thornhill review) which was to inform the implementation of the property tax has not been published.

An SVT would have had the additional benefit of incentivising the development of derelict land and penalising land-hoarding, thereby promoting better planning outcomes with brownfield sites preferred to greenfield ones.

Car tax changes
Friends of the Earth welcomes the fact that the changes to Motor Tax and VRT maintain the direct link between carbon emissions and the tax rates. That reform introduced in 2008 has been a huge success and demonstrates how tax reform can deliver real environmental benefits. Given that the vast majority of cars registered are now in the A and B bands for lower emissions the splitting of those bands makes sense and builds on the success of the emissions-based tax system.

Car registration changes
The move to introduce two new registration codes for number plates every year is a regressive gimmick. We should be moving away from annualized number plates which encourage people to change their cars more often than necessary. Given the embodied emissions in a new car this generates huge pollution without even generating employment in Ireland. Just as with the ridiculous car-scrappage scheme the main beneficiaries are German and Japanese car manufacturers.

Carbon tax changes
Friends of the Earth welcomes the extension of the carbon tax to solid fuels. Having a carbon tax which exempts the two dirtiest fuels, coal and peat, is like going on a diet but allowing yourself cake and chocolate.

It is essential, however, that the Government takes steps to tackle fuel poverty. Revenue from the carbon tax must be used to enable poorer households to retrofit their homes. What we want is warmer homes that use less fuel to heat them.

Retrofitting
Minister Howlin's emphasis on the Government target of retrofitting 100,000 houses every year from now to 2020 is welcome. But the actual measures announced so far are nowhere near enough. The €35 million in support funds announced today is far too little. There is real uncertainty over the future of the popular SEAI grant schemes and uncertainty about when the new "pay-as-you-save" scheme will be up and running. This makes it likely that retrofitting will stall in 2013 rather than take off. Moreover, the new property tax will act a real disincentive as the investment required for retrofitting will push your house into a higher tax bracktet.

ENDS