2007 September 03 Monday
British Group Claims Green Taxes Exceed Environmental Costs

People in Britain think their government is using environmental scares to increase taxes.

Nearly two-thirds of the public believe ministers are using environmental fears as an excuse to raise tax revenue, according to a poll.

And research suggests their cynicism is justified - with green taxes raking in £10 billion more for the Treasury than it would cost to offset the entire UK's carbon footprint.

The figures are contained in a dossier compiled by pressure group the TaxPayers' Alliance (TPA).

You will hear legions of economists arguing that carbon taxes are the most efficient way to reduce carbon dioxide emissions. Leave aside whether carbon dioxide emissions reduction is necessary. Carbon taxes pose one huge problem: they provide a way for governments to collect even more money in taxes. Governments will impose assorted "green" taxes. Then they'll say there's still a problem and that taxes must go up even higher.

One of the advantages of income taxes is that you get a single bill that shows the total cost of taxes from income. The size of that tax bill creates popular resistance to still higher taxes. But if taxes take many forms then they show up hidden in total prices of goods and services. Therefore the public is less aware of the total cost of taxes and less motivated to oppose tax increases. The more kinds of taxes that get enacted the more hiding of taxes that occurs. This is especially the case with sales taxes and value added taxes.

The Taxpayers Alliance of Britain claims the British government is collecting more in green taxes than it would cost to mitigate and reduce CO2 emissions effects.

Britons are paying more than £10 billion extra a year in green taxes than is required to cover the cost of Britain's "carbon footprint", research claims.

Using previous research into climate change, the report for the TaxPayers' Alliance estimated that covering the social cost of Britain's carbon emissions would have cost £11.7 billion in 2005.

But receipts from "green" taxes such as fuel duty, road tax and the climate change levy in the same year totalled £21.9 billion, according to the study.

This means that Britons paid £10.2 billion too much in green taxes that year - or £400 for each household in Britain.

An accountancy argues that the British government should use carbon taxes to fund tax reductions for companies and citizens that reduce emissions.

Meanwhile, accountants UHY Hacker Young claimed the Treasury receives about £29.3 billion in green taxes, such as air passenger duty, every year but hands back only £5 4 9 million to environmentally-friendly taxpayers. The group said the figures showed that despite the Government's rhetoric about green tax breaks, little money was actually paid out.

It said the Government raised a massive £25.1 billion on fuel duties and took in £2.1 billion in air passenger duty each year, but reduced vehicle excise duty for people who drive environmentally friendly cars cost it only £254 million.

Roy Maugham, tax partner at UHY Hacker Young, said: "It's surprising just how lopsided the Government's approach to green taxes has been over the last 10 years. It's all stick and very little carrot, but arguably a more balanced approach would be much more effective at hitting Britain's C02 targets.

I find both regulation and emissions trading markets preferable to green taxes because they keep money out of the hands of governments. For example, some US states are setting requirements that rising percentages of electric power come from non-fossil fuels sources. Such a requirement basically creates market demand and competition between cleaner energy sources without enriching the coffers of governments. Markets still look for the cheapest energy sources between a long list of alternatives (wind, solar, nuclear, geothermal, waves, tides, etc) with minimal government involvement.

Share |      By Randall Parker at 2007 September 03 10:42 AM  Economics Environment

Carl Shulman said at September 3, 2007 11:30 AM:

What about a dedicated carbon tax funding the NIH and NSF (much larger than their current total budgets, ensuring that the effect is not simply diversion between government pockets)?

Randall Parker said at September 3, 2007 12:22 PM:

Carl, It is my understanding of US constitutional law that there's no way to have a real dedicated tax. There's no way to put money into a category that Congress can't control in the regular budget.

The Highway Fund suffers from this problem. There's no way to guarantee that all money collected from gasoline taxes will get spent on roads and bridges.

lowly said at September 3, 2007 12:57 PM:

Lol, whattsamatta, can't find your way out of the box on this one?

How about bringing up a long term chart of atmospheric carbon? Jawohl, carbon deficit. It would be bloody amazing if atmospheric carbon didn't rise from this level - and you're gonna pay taxes for that???

Randall Parker said at September 3, 2007 1:32 PM:

lowly, You can't be bothered to provide a link to a historical chart of atmospheric CO2. Yet you are happy to assert (incorrectly) that we are somehow below some normal level of atmospheric CO2.

What carbon deficit?

In two articles analyzing air from the ice core published in the journal "Science" today, European researchers have extended the greenhouse gas record back to 650,000 years before the present, adding 210,000 years to previous records.

One study chronicles the stable relationship between climate and the carbon cycle during the Pleistocene Era, 390,000 to 650,000 years before the present. The second one documents atmospheric methane and nitrous oxide levels over the same period.

The analysis shows that today’s rising atmospheric carbon dioxide concentration, at 380 parts per million by volume, is now 27 percent higher than its highest recorded level during the last 650,000 years, said "Science" author Thomas Stocker of the Physics Institute of the University of Bern, in Bern, Switzerland, who serves as the corresponding author for both papers.

You can find much more developed treatments of energy policy in my FuturePundit site about fossil fuels and energy policy.

I also think my critical views on biomass energy are worth reading.

lowly said at September 4, 2007 3:19 PM:

Well, my comment was directed at your "Stepping out of the box to look at events." sub-header. It struck me as as bizarre as you are clearly in the box, and quite comfortable there.

I would expect someone outside the box to appreciate the fact that plants love higher CO2 levels. I would expect an out-of-the-box thinker to wonder why. I would also expect someone outside the box to argue that increased CO2 levels increase forest growth and food crops, for instance, and therefore allow us to replenish depleted forests and feed earth's increasing population. I would expect an out-of-the-boxer to question the role of the sun in influencing planetary temperatures in the solar system, questionable computer models along with questionable data, etc etc ad nauseam. In sum, I would expect an out-of-the-boxer to question mainstream thinking. What I wouldn't expect would be for an out-of-the-boxer engage in discussions of trivial details regarding mainstream, authoritarian taxation schemes. What's the point? What are you adding?


Looks like a CO2 deficit to me. If the chart is reasonably accurate, what are the odds that CO2 levels are going to rise in the future?

Randall Parker said at September 4, 2007 6:18 PM:


So you think you know what I think and what I know. Yet you obviously haven't read most of what I've written.

Plants love CO2? You mean I don't already know that from undergrad biology classes? See, for example, my post Rising Carbon Dioxide Causing Forests To Expand Into Deserts" before you start guessing what I do not know or understand.

Or, how about my posts Will Sun Cooling And Oil Depletion Prevent Global Warming? or Sun Energy Output At Over 1,000 Year Peak? They don't fit with what you think I know either.

Taxation schemes: I'm pointing out that taxation is a bad way to put external costs into prices because taxation makes the size of government expand. That's the reason I wrote this post.

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