Green Taxes…and spending.
Rumbold makes half of a fair point over at Pickled Politics. To whit:
Let us assume for the moment that green taxes are effective, in that they will lead to people being in a more environmentally-friendly manner. These taxes are thus desirable, so long as the overall tax burden does not rise. There is a simple enough way to convince people that green taxes are not just another means by which the government raises revenue; every pound raised by green taxes should be matched in cuts on income tax, by raising the threshold at which people start to pay income tax. Moreover, the tax on oil should be reclassified, so that 25% of the tax counts as a green tax. This 25% would then be spent on the basic state pension.
He’s right; people will become suspicious of “green” taxes when they’re self-evidently being used as stealth taxes. Where I disagree is on what to do with the money.
Environmental taxes should change behaviour. However, they can’t do that simply by disincentivising this behaviour: they need to provide alternatives. Green life needs to become more attractive economically than whatever took place before. It’s possibly possible (oops…) to do this entirely through the tax system, simply making environmentally damaging behaviour so expensive as to be unviable.
But that’s hardly fair, as the alternative could remain expensive. Here, rising fuel costs make cars less and less attractive to drivers - but if public transport stays as stupidly expensive as it is, then people will stick with them. So the state needs to provide those alternatives, or face a cynical public on green taxes and inaction on green issues.
The answer is to use the money from green taxes for green purposes. The millions from fuel duty should subsidise public transport and so make it easier for people to abandon their cars. Public scepticism would fall as everyone felt the benefits. And, most importantly of all, the issues which the taxes existed for would be addressed - which isn’t certain with matching tax cuts elsewhere.
Rumbold rightly argues that green taxes will lose public support if they’re actually stealth taxes. But they won’t work if the state doesn’t move beyond intervention. People will grumble about the green tax, gratefully take the income tax cut - and move on. Environmental issues remain unchallenged. In the case of rising fuel duties, many might well use the money saved on income tax to pay for exactly the same amount of newly-expensive fuel as before. Nothing would change.
That’s why green government needs green spending just as much as it needs green taxes. It’s not just about making certain behaviour unattractive. It’s about making the alternatives attractive as well. People will have no reason to change beyond what they hear in the news, otherwise - and they’ve been hearing that for 30 years. The most logical way of making that change is to use the money from making the former behaviour unattractive to make the other behaviour attractive. Surely?
If there’s any money over once that change happens, then great - bring on the tax cuts. But until then, it’s tax and spend we need, not tax and balance.
But if you increase the tax on polluting behaviour, and then funnel it into another part of government, people will resent it. It doesn’t matter if the extra money is used to make public transport better, there is still an overall tax increase, which is wrong.
You seem to have misunderstood me - or have a very narrow view on how to tackle polluting behaviour. It’s not enough to disincentivise it. Without affordable alternatives, people will carry on behaving that way as they have to, so logically the state needs to provide those alternatives to the behaviour it’s made more difficult.
Issues like the quality of public transport are thus very green. While travelling in cars is more convenient than public transport, people will continue to use them. And pollute. Unless you’re suggesting that people should be prived out of their cars without making their journeys as possible as before by improving the transport network?
Changing behaviour requires a broader approach than making life difficult for people. The alternative has to be made accessible, or no change will occur. And that requires spending the money raised from making life difficult in one area to make it easier in another, related area. The issues aren’t related - but simply form part of a broader take on government.
And what’s wrong with overall tax increases, out of interest? As far as I can tell, if you take the attitiude that tax should be low, it seems very arbitrary to chose the levels it’s at now to maintain.
I have no problem making public transport a more attractive alternative to cars. However, this should be done out of existing funds. I am in favour of lower taxes, but as none of the three main parties want to give any of our money back, and they all claimed to care about the environment, I felt that reducing income tax was a good way to show that green taxes could in fact be revenue-neutral. Nor would I want to price people out of their cares, but higher taxes on cars do make the alternatives more appealing.