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Mark Wadsworth

Be warned, hypothecation is just fluff. It means nothing and never works in practice.

Green taxes can be justified if they raise money without distorting the economy too much. E.g. the price of petrol is 90% tax but people still drive around. If this encourages them to drive less and use less petrol so much the better.

Green spending can be justified if it is commercially worth it. If loft insulation saves more than it costs, then people should insulate their lofts, whether there are green taxes to pay for it or not.

I fail to see any connection in theory and there is none in practice.


Well I,m in favour of hypothecation because it provides a direct link between cost and outcome and people will start to vote for less outcome (which is almost always a Tory result) if they can see the costs directly derived from it.

I would replace income tax with 3 flat rate hypothecated taxes to fund a fixed proportion of the NHS SS and local government budgets so that voters would keep a more jaundiced eye on all three expenditures.


The problem here is to which "green" activities are you going to hypothecate the money?

Environmentally friendly wind farms which blight the countryside and kill the bird population?

Loft insulation for people with nice big houses who would be better off if they did it anyway?

Buying up chunks of third world forest, preventing their indigenous development?

How about the much-touted "Manhattan Project" to find a new source of cheap, plentiful energy? (Though no one has never explained how come the old Manhattan Project did not achieve exactly that).

Jonathan Powell

This is a terrible idea since the advantage of green taxes is to shift the burden of tax from productive activities (such as work and investment) onto damaging activities such as pollution. As I understand it, this policy implies spending the money raised by green taxes on new programs, subsidies, "restitution", whatever, so we would still have to raise the same revenues from other taxes to pay for the NHS etc.

Plus, it ignores the fact that the socially optimal amount of pollution is not zero, and we can achieve this social optimum (in principle) with taxes that raise the private cost of polluting to the social level, regardless of what the revenues are spent on. Thus even from a "green" perspective, hypothecation like this is unnecessary.

Denis Cooper

I agree with the principle that the polluter should pay, and not be allowed to externalise costs. However the costs of pollution are, in many cases, literally incalculable. For example, is it really true that the increase in asthma is partly linked to pollution of the air by vehicle emissions, and if so what are the costs of the increased asthma attributable to that cause? If new research shows that the link is weaker or stronger than previously thought, or that the costs of treatment and the loss of production through the illness are lower or higher than previously calculated, do we adjust the tax levied on fuels? It seems far too complicated, and complication itself always involves extra costs.

Stephen Ogden

There is solid economic logic behind the author's ideas. However, this strikes me more as an academic treatise than a 'policy idea'.

Firstly, as Denis Cooper points out, there are strong doubts about the practicality of implementing Spencer Tasker's ideas. Mr Tasker may wish to flesh out his theory with a few real life examples.

Secondly, most people are going to read his posting and ask 'what is this fella actually saying?' Potential Conservative policies should be clear. They should be understandable by the average resident of Westhoughton, Horwich, Altrincham or Lancaster.

I'm voting 'no' on this 'policy' for these reasons (izvinitye pazhalusta, Spencer).

However, perhaps the author can use this self-same academic logic to underpin some practical, specific, concrete policies?


Bring forth the carrot / punishment

Sounds nice but it is not possible for everyone to here and now switch to less poluting alternatives as such alternatives means new investment. A lot of people/companies are being taxed to the bone and will not be able to change.

The appearance of evil

This is what these taxes will end up as in practice. Do you think DC use Toynbee as a reference because he is Conservative?

John Moss

The first sort of hypothecation we should be supporting is that of the near 24% of payroll which is taken in NI contributions.

6% should be hypothecated to a private, money purchase pension for the employee to "own and manage".

12% should be hypothecated to a health insurance policy which the employee would own and use to secure the healthcare they need.

4% should be used to provide insurance against permanent or extended temporary loss of income due to incapacity.

2% should be used to fund the interest and debt repayments on the borrowing needed to fund other people's pensions until the generations benefitting from this come through and our existing cohort of pensioners whose retirement incomes are not funded, die out. (Sinking funds like this paid of the national debt incurred fighting the American War of Independence).

Start there and we start to address real problems at source.

Mark Wadsworth

John Moss, firstly you are changing the topic, secondly you are worng, e.g.

"6% should be hypothecated to a private, money purchase pension for the employee to 'own and manage'"

Why not just chop 6% of the NI rate so that ye olde taxpayer has more money in his back pocket to waste, spend, save or invest as he pleases? Paying off your mortgage that bit quicker is 9 times out of 10 as good as any other form of saving/investment.


Hypothecation is economically illiterate crap. Environmental taxation has a specific purpose - to internalise the cost to others of your polluting. There is absolutely no logical reason why the sum raised by such taxes should equal a sensible amount of money to spend on environmental projects. That sum could easily be either more or less.


To add to that - you chose forms of tax which limit economic distortions and spending that does the most good. You do not endlessly try to pretend that the former has any necessary connection with the latter. You try to balance effective revenue spending with efficient revenue collection. End of story.

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