Azara Blog: Tories want businesses, but not households, to pay "green" taxes

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Date published: 2006/11/27

The BBC says:

The Conservatives are planning a carbon tax on British businesses to persuade them to reduce their emissions, shadow chancellor George Osborne has said.

The party says the proposal would raise more revenue than the existing climate change levy.

Any extra money would be returned to businesses through other tax cuts.

The climate change levy was introduced in April 2001 to cut emissions from business.

Companies can often recoup the money through the energy they save and can also avoid the levy by using renewable energy - but not nuclear energy.

The BBC's economics editor, Evan Davis, says the levy raises less than £1bn per year, and that this new proposal is the first substantive proposal by the Conservatives for a new environmental tax.

He also says there are no plans by the Tories to tax households directly on their carbon emissions.

The Conservatives have said they want green taxes to form a higher proportion of all taxes, although they do not want the overall tax take to rise.

It's a nonsense to put all these so-called green taxes on businesses and not on households unless the pollution of the latter has already been taxed at source. And the Tories, like all the other political parties, have not faced up to the fundamental problem of so-called green taxes. If they succeed in changing people's behaviour then the amount of tax is drastically reduced, so you have to whack up the rate or increase other taxes in compensation.

The level of an environmental tax should not be determined by fiscal requirements, it should be determined by the amount of environmental damage a given activity causes. No political party (and no so-called environmentalist) is willing to face up to this simple idea. (A starter for ten: car drivers already pay a sky-high carbon tax, while train commuters pay an effective negative tax, since their journey is heavily subsidised, so which activity do all the ruling elite want to tax more and which do they want to subsidise more?)

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