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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.

By Randall Parker    2007 September 03 10:42 AM Entry Permalink | Comments (6)
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