Some observations on today's TPA report, as highlighted by Matthew Sinclair below:
Firstly, almost all of the 'green tax burden' identified in the report is accounted for by Fuel Duty and Vehicle Excise Duty, which were significant taxes long before any serious government policy on climate change. In fact, since the Millennium, they have diminished as a proportion of the overall tax take.
Secondly, the revenues from Fuel Duty and Vehicle Excise Duty are not hypothecated for any environmental purpose, and are used to fund general expenditure. In other words the money would have to be found from elsewhere. One could, of course, cut expenditure in order to fund a cut in these so-called green taxes, but that would still be at the expense of reducing the tax burden in some other way.
Thirdly, it is worth noting that though the main point of the TPA argument is that the burden of environmental taxation is in excess of the environmental cost of the taxed activities, the only environmental costs taken in account in calculating the level of "excess green taxes" are those concerning greenhouse gas emissions. The costs of local pollution and traffic congestion are excluded.
Fourthly, and most importantly, the entire argument is based on a flawed premise, which is that the purpose of green taxation is to make people pay for the environmental damage that they do: in other words, that for every £1 of damage there should be £1 of taxation. But surely the point of environmental taxation is to change behaviour – to encourage consumers to switch to less damaging patterns of consumption. Thus every £1 of tax needs to be compared not against the environmental cost of, say, the carbon emitted by the taxed activity, but what would have been the environmental cost of all the carbon not emitted due to the influence of the tax on consumer behaviour.
In other words, environmental taxes – if they are to be justified at all – should be about prevention not reparation.
