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Green taxes have been under attack on all fronts lately.
Chancellor George Osborne’s Summer Budget announced a review of energy efficiency levies and an effective reduction in renewables subsidies. Air passenger duty has long been the victim of sustained industry attacks, and the SNP’s pre-election pledge to scrap the tax once it has the power to do so looks like the first step in a race to the bottom. Elsewhere, the German government was forced to weaken plans for additional levies on coal.
And yet, there’s a broad consensus that environmental taxes are, in principle, a good idea. Various analyses proclaim their virtues: it’s right that the “polluter pays
”; we should “tax bads not goods
”; we’ll secure a “double dividend
” of less pollution and more revenue – the list goes on. So what’s the problem here?
Essentially, taxes affect people in ways that economic theory just doesn’t account for. There are two key lessons for implementing green taxes:
- Taxation is a moral statement. So let’s be careful about who we’re blaming.
Who is the polluter? Is it the coal plant or the energy consumer?
Taxes have a financial impact but also assign blame and guilt. Do we allocate blame in exact proportion to environmental damage? What about when some basic level is required to fulfil needs, as with energy?
Recently we argued that we should shift the blame for the climate impact of air travel on to those that overuse the system – a tax on frequent flyers
- Taxes are important, but changing the way we behave means engaging people in solutions.
Taxes can cause disengagement – they psychologically disconnect polluters from their responsibility. It’s like paying a debt – you walk away with a clean conscience having absolved your guilt.
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