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Green taxes are a rip off says low tax lobby group

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Green taxes are being used by the government to raise revenues, rather than tackle climate change; are bad news for consumers and are socially unjust. These are the conclusions of the Taxpayers Alliance (TPA), a right wing lobby group dedicated to a low-tax society.

The TPA says that it has taken at face value the current analysis of the social cost of the UK's carbon dioxide emissions, drawing on resources such as the Stern Review, and the reports from the IPCC (Intergovernmental Panel on Climate Change) to come up with a figure of £11.7bn. This, it says, is what it should cost us to deal with climate change.

The group then compared this to the total cost of so-called green taxes, and concluded that the treasury raises almost twice as much money from these taxes as it needs to spend to deal with the social impact of our carbon footprint.

The major area of "overcharging" is fuel duty, which raises almost £20bn every year, over and above the amount spent on roads. The TPA argues that fuel duty is regressive, since it costs poorer people proportionally more, and should therefore be reduced.

Other taxes under fire include the climate change levy (unfair to Northern businesses), landfill tax (likely to be imposed in addition to council tax), air passenger duty and emissions trading schemes.

The report, which you can download here, concludes:

In many cases, green taxes are failing to meet their objectives, are set at a level in excess of that needed to meet the social cost of Britain’s CO2 emissions, and are causing serious harm to areas of the country and industries least able to cope. Green taxes should not be seen as a benign alternative to taxation of income and profits. Plans for new green taxes need a serious rethink.

But did anyone ever think all of the 50p per litre (and more) on petrol went to our roads and tackling climate change? After all, fuel duty has been with us for many years more than the global warming debate. Quite plausibly, our habit of driving around has at least partially funded our education system.

(Similarly, taxes on cigarettes, ostensibly to fund the NHS costs of lung-cancer-ridden smokers, are also an exercise in revenue generation. And why shouldn't they be? Taxes are there to raise revenue: after all)

If the TPA is arguing that the government is failing to meet its targets on climate change, or that the government is wrong to suggest that raising taxes will, in isolation, make us a greener nation, we're right behind it. But if they are arguing that we should get discounted petrol because the government doesn't need the money, (much as it pains us) we can't quite get bring ourselves to agree.

The problem lies in the assumption that: "green taxes can reduce the quantity of CO2 emitted in an economy by making activities that result in emissions more expensive".

This, we suspect, is a red herring. The government is certainly behaving as though it believe this to be true, and the TPA has taken it as one of its core assumptions, but we suspect it misunderestimates human nature.

Making a type of car more expensive, for example by raising the parking, tax and congestion charge costs associated with huge Chelsea tractors, doesn't stop people driving them. If you can afford a Porsche Cayenne, you can pay the tax. Poor families are not driving around in four-by-fours, after all. They're already on the bus.

The trouble is, that actually tackling our energy dependence means taking politically suicidal decisions. No one is going to vote for the government that says it is going to reduce the maximum allowable engine capacity of cars, ban farming of cows, insist we abandon all but local fruits and vegetables or ration our utilities.

But we digress. The TPA's sums suggest that UK households are overpaying tax by £400 per year. It accuses the government of cynically passing tax rises by calling them "green", and wants future environmental taxes to be reconsidered.

The Treasury responded predictably enough, maintaining that it is on target to meet its commitments under Kyoto. It also stressed that fuel duty is not primarily an environmental tax.

"In arguing against these taxes, the Taxpayers' Alliance are being doubly dangerous - it would mean cuts to public services, schools and hospitals, as well as higher carbon emissions leading to accelerated climate change," it said in a statement. ®

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