Green taxes fail to meet their objectives, are way in excess of that needed to meet the claimed cost of CO2 emissions and are causing “serious harm” to areas of the country and industries least able to cope, according to a report on the topic by the Taxpayers’ Alliance.
The report, titled “The Case Against Further Green Taxes,” says that “taking an average of the most widely quoted official and academic estimates of the social cost of CO2 emissions shows that green taxes in the UK are already well in excess of the level they need to be to meet these social costs.
“The social cost of Britain’s entire output of CO2 was £11.7 billion in 2005 but in the same year, the total net burden of green taxes and charges was £21.9 billion,” the TPA says.
“This means that green taxes and charges are already £10.2 billion in excess of the level they need to be to meet the social cost of Britain’s CO2 emissions. This excess is equivalent to over £400 for each household in Britain.
“Green taxes are therefore already too high if they really are a means of internalising environmental externalities rather than simply revenue-raising measures.”
The TPA report says that “green taxes have become enormously popular amongst all the main political parties in recent months. The Government has doubled Air Passenger Duty; the Conservatives have indicated that they will ‘rebalance’ the tax system from taxing income to taxing carbon emissions, and the Liberal Democrats have proposed raising Vehicle Excise Duty for the most polluting vehicles to £2,000 a year.”
The report says that “calling for new or higher green taxes allows politicians to portray themselves as responsible defenders of the environment. Higher green taxes can also be sold as a sensible economic move towards taxing ‘bads’, such as CO2 emissions or landfill waste, rather than ‘goods’ like corporate profit or earned income.”
It continues: “Our audit also casts doubt on the rosy picture of green taxes that has often been presented. Green taxes and charges are not always a benign alternative to more traditional forms of taxation: they can impose substantial costs on, amongst others, Northern manufacturers, the NHS and the less well-off.”
According to the TPA, Fuel Duty is already over 50p per litre of regular unleaded petrol, and Vehicle Excise Duty raises almost £20 billion above the amount spent on roads.
“This is between 3.6 and 40.9 times higher than the level needed to ensure that drivers cover the official and academic estimates of the social cost of CO2 emissions, costing each motorist an average of between £548 and £743 each year,” the TPA report says.
“Ignoring road spending, Fuel Duty alone raises more than five times the Intergovernmental Panel on Climate Change’s estimate of the social cost of Britain’s entire annual output of CO2 emissions.
“Further increases in taxation on motorists are not justified on environmental grounds; indeed, Fuel Duty and Vehicle Excise Duty should actually be significantly reduced.
“Given that middle class and poorer households spend proportionately more on motor oils (including petrol) than richer households, reducing Fuel Duty would be a progressive move,” the TPA said.
Without expressing an opinion as to the veracity or otherwise of ‘Climate Change’, the TPA report makes the following interesting remarks:
“Under the Climate Change Levy, which taxes the use of energy in industry, commerce and the public sector, the North East, England’s poorest region, pays over 35 percent more as a proportion of regional Gross Value Added than the South East, England’s richest region outside London.
“The Climate Change Levy is contributing to the continuing decline in manufacturing, with 1 million manufacturing jobs lost since the levy was introduced.”
Turing to air passenger duties and taxes, the TPA says that the “doubling of Air Passenger Duty” is actually likely to have increased total emissions from air travel, incentivising longer flights within the short-haul and long-haul bands.
“We also estimate that the levy costs the tourist industry £156 million a year.”
Finally, the TPA report says that its conclusions “raise serious questions about the merits of imposing new or higher environmental taxes. We hope that politicians of all parties will take our findings seriously.”
The British National Party certainly does take these findings seriously, in contrast to every other party which actively seeks to increase “green taxes” even further.
*The TPA report can be downloaded in full by clicking here.