Tax carbon - not labour?
A report, compiled and published by The Green Fiscal Commission, (read it here), proposes a radical rethink of our taxation system that has the potential to not only assist the UK in reaching its 2020 carbon reduction targets but also create a taxation model more relevant to the 21st century.
Until the publication of this report, it would be fair to say that carbon tax has been viewed as an additional form of taxation viewed either as a means of subsidising green technology and innovation or as a stealth tax, designed to raise tax revenues in a way that carries the electorate along with the spin of government climate consciousness and care.
What this report proposes is that we look at taxing an individual’s or an organisation’s carbon output instead of basing the tax calculation on labour – a shift from taxing you on what you earn to a tax on what you spend your earner income on. In a century where high carbon usage is threatening society’s future sustainability, this is more relevant as means of raising revenue to fill the public purse.
The strategy is not without risk and requires a major shift in thinking not from individuals and companies but also, and this is the greatest challenge, from political leaders. Considering, however, that both the last Labour manifestoes contained 2010 targets that will be missed, there is every chance that the incumbents may be more open to new ideas that may help win the next election and the challengers have an opportunity to pick up a match-beating ball.
From both an individual’s and company’s perspective, the first level of resistance is likely to arise around motoring/transportation costs. Despite the road haulage drivers’ blockades of a few years ago, we should not forget, however, that although we currently pay the highest level of tax on fuel within the EU (at 67% of the retail price – unleaded petrol), we do not pay the highest price at the pumps (we’re actually well into the lowest half of the league table) and we already pay a green tax on our usage (it’s called Road Fund Licence!). So there’s no new, bad news on this front.
There will, however, need be serious thought put into describing the transport infrastructure of the 21st century – it will not look like the one we have now; and that counts not only for goods and services but also for utilities and data.
The authors held a number of workshops and polled over 1,000 individuals in the course of preparing the report. The size of the task, if we are to re-engineer our economy for the future, is not to be underestimated; the report states, “Although climate change was a concern for participants, it was not a leading issue for them. In particular, the lack of belief that climate change would make an impact on people personally was one of the key factors shaping individual views on taxes in subsequent group discussion: making them much more likely to oppose the more contentious reforms such as fuel duty and a carbon tax. Conversely, those who believed that climate change will have an impact on them were most likely to support the adoption of such measures.
This highlights a need to tackle the deeper levels of awareness and understanding to convince individuals of the urgency and importance of the issue and to understand the relationship between their consumption behaviour and the process of climate change.”
Whatever your initial thoughts, the report merits reading in full and everyone’s engagement in the discussion before the government hijacks it and turns it into something else.
