Cameron: We will raise green taxes but they will be replacement taxes

Speaking at the LSE David Cameron has crushed any idea that the balance of green tax measures under a Conservative government will be cuts to encourage good environmental behaviour rather than tax rises to discourage 'brown behaviours':

"By using green taxes as extra stealth taxes, Gordon Brown has given them a bad name.  I’m determined that the Conservative approach will be different.  With my Government, any new green taxes will be replacement taxes, not new stealth taxes.
 
In a few days, our Quality of Life Policy Group will publish its report.  It will contain many recommendations on tackling climate change, at home and abroad, including recommendations on green taxes.  As with all the reports in our Policy Review, we will study its proposals carefully.
 
But let me be clear.  We will raise green taxes, and use the proceeds to reduce taxes elsewhere.  That is the right direction for the environment and it’s the right direction for our economy.  It is the best way to deliver the green growth that must be our aim."

Mr Cameron's remarks come within a longer speech on 'Meeting the economic challenges of the future'.  Download a PDF of the full Cameron text.

Comments

[James Maskell]

Ill post at a later time so I can have time to digest this. Its absolutely critical that the leadership make it clear exactly what is being proposed here and ensure that the principles and the numbers add up. Brown is the premier number cruncher and will see through it if we arent secure.

First thoughts, what happens if the public play ball and change their behaviour? Wont this then lead to a reduction in tax receipts, which will mean a black hole in finances which will have to be filled elsewhere? Either that or increasing those environmental taxes further still.

I'd have preferred Osborne to have done this speech.

[Chad Noble]

Exactly James. Someone just needs to ask Cameron this simple question;

"Why are you proposing these green taxes, is it to change behaviour?"

When he answers 'yes' (there can surely be 0% chance of a 'no') then he needs to be asked how the revenue gap will be filled when this behaviour change is achieved.

[TimC]

We need to be very careful here - a lot of people could be put off if they feel that their annual holiday is going to be taxed. For many, is is already a struggle to afford a break during the school holidays. An annual quota could help address this (which would have to be enough for a annual family holiday).

Also, we could consider offering a tax incentive to to travellers who offset their CO2.

[Chris Heathcote]

This is the third Cameron speech I have attended and which has been reported by Conservative Home - how come no Conservative Home correspondent ever asks any questions?

[Traditional Tory]

Chad's point is exactly the one that I have made before.

The prime purpose of "Green" taxes is surely to discourage pollutant behaviour. If the desired result is achieved the revenue goes out of the window.

Yes Osborne constantly suggests green taxes as a "flagship" source of revenue. I don't buy it.

[ThatcherBoy]

Tory MP: Taxes under Brown are at a record high and are harming our economy.

Ordinary voter: So would you cut them?

Tory MP: No.

Ordinary voter: But if taxes are too high, surely you will cut them?

Tory MP: No. There will be no upfront promises of tax cuts before the next election.

Ordinary voter: Why not?

Tory MP: The public don't believe us when we promise tax cuts. Tax cuts are not a magic bullet.

Ordinary voter: So what will you do?

Tory MP: We will promise to increase green taxes.

Ordinary voter: But I don't want to pay more tax - green or otherwise.

Tory MP: Don't worry, every pound of new green taxes will be met by a pound off taxes elsewhere.

Ordinary voter: Where?

Tory MP: As I said, we are not going to be laying out specific tax cuts upfront.

Ordinary voter: But you have just said that you will be pledging to increase my green taxes.

Tory MP: That is correct.

Ordinary voter: So if I vote Conservative I'll definitely pay more in green taxes. But why should I believe you when you say you'll cut other taxes?

Tory MP: Because taxes under Brown are too high and have to come down.

Ordinary voter: So you will cut them?

Tory MP: No. There will be no upfront promises of tax cuts before the next election.

[REPEAT TO FADE...]

[David Cooper]

There is a clear danger that a green tax to discourage pollutant behaviour would be seen as nothing more than a "sin tax" created to take advantage of it in the same way as alcohol and tobacco duties. The latter merely induce passing groans of dismay every Budget Day, but - by analogy - just think of the practical effect of going into an election under a banner proclaiming that alcohol and tobacco would be more highly taxed in a specific and immediate way.

[Cornstock]

Chad @ 10.18

I couldn't agree more!

[Mark Fulford]

First thoughts, what happens if the public play ball and change their behaviour?

This is one of those strange "can't do it forever, so we shouldn't start it" arguments.

Obviously we want green taxes to encourage green behaviour and, equally obviously, that means that taxes will have to shift again. However, at that time we will:

1. have successfully encouraged green behaviour (a plus),
2. left money in people's pockets (by reducing general taxation) and, for a time, have given us a choice whether to pay green taxes (a plus),
3. end up with a balance of taxes no different to today (a neutral).

[Radical Tory]

It just does not add up as other posters have pointed out. I fear Labour will be able to dismiss Cameron as someone who hasn't doen his sums. They could portray him as someone who needs to go back to school to do maths against the statesman Brown - that would be effective for Labour and very bad for us.

[David T Breaker]

what happens if the public play ball and change their behaviour? Wont this then lead to a reduction in tax receipts

Yes, if it actually reduces the behaviour that pollutes. The tax on aviation however is only expected to reduce growth, from 5% to 3% per year, so revenue won't actually decrease but just grow slower.

However where the matching tax cut occurs behaviour will also change, but increase instead of decrease, therefore boosting the economy and tax revenues from that area.

[Les]

Am I the only person who feels that the tax system should not be used for social engineering?

If smoking is felt to be a bad thing, for example, why not just deal with the problem directly through education and by banning the practice in public places which has (eventually) been done.

Any motorist who pays road tax, fuel duty, congestion charge and carbon-based parking fees is entitled to ask "how many times must I be punished for the same crime?"

By what perverse logic should you be punished for failing to marry or rewarded (as used to be the case) for taking-on a mortgage commitment.

Why do travellers on the 'green bandwaggon' fail to recognise the tremendous strides made by the automotive and aviation industries in producing more fuel-efficient vehicles?

Both industries were once encouraged by Government but are increasingly undermined despite their achievements.

In my view, we need a much simpler tax system whose sole purpose is to raise the funds required to meet public expenditure.

Also, the benefits system should focus on those in genuine need rather than shelling-out because somebody decides to have a child or just happens to have reached the age of 60.

[Edward Huxley]

A CONSERVATIVE (Ha Ha) leader promising to introduce yet more taxes..... words fail me.

By the way, I do not take any notice of contributors using a nom de plume. Anonymous letters should be ignored.

[Cornstock]

I'd have thought the best solution would be the opposite of what Cameron is proposing- i.e. that green taxes should not be replacement taxes, but that any money raised by them should be used to promote 'green' behaviour

So for instance a tax on 'gas guzzling' cars should be used to fund research into alternatives to oil, a 'bin tax' should be used to promote recycling and encourage less packaging with the ultimate aim being a successful green tax is one that creates no revenue , in much the same way as a successful fine is one no-one pays.

[Tanuki]

In my book, 'green' means 'gullible and unfamiliar with the cut-and-thrust of the real world'. So it is with those who fall for the 'green taxes' nonsense.

Rather than slapping with taxes the people who aspire to a decent car, a nice widescreen TV, a patio-heater, a couple of weeks holiday in the sun - we should be supporting these aspirational aspects!

"You've earned it, now enjoy it" should be the Conservative tagline, not the horrid slapdowns that Goldsmith and his unrepresentative cronies seem to want to inflict on our potential supporters.

[Sam Tarran]

Especially with the finding of the Taxpayer's Alliance's survey, it's crucial Cameron makes it clear that green taxes aren't extra taxes, and is not afraid to use 'green' tax cuts as an incentive where possible.

It's so much more attractive to all concerned - the "right-wing", the green lobby, the papers - if he pulls this off right.

[John Waine]

"So for instance a tax on 'gas guzzling' cars should be used to fund research into alternatives to oil, a 'bin tax' should be used to promote recycling ..."

Unfortunately, history shows that such an approach doesn't work. Once, car owners paid an annual Road Fund Licence, the revenue from which was supposed to be used to fund the costs of road building & maintenance. Now, it's called Vehicle Excise Duty and is just another tax which greedy Chancellors can use any way they choose. Politicians simply can't be trusted with our money and ought not to be allowed to get their sticky hands on it!

[Incidentally, isn't it funny how the motorist always seems to be regarded as fair game for punitive taxation (along with the smoker & drinker, of course).]

The unfortunate truth about "green" taxes is that they will bear most heavily upon the lower-to-middle income groups; the rich will simply pay up and carry on doing what they like.

[James Maskell]

The argument continues to be made that we are to have tax cuts which will match the tax increases in other areas. We have said we will match Labours spending commitments, though weve also commited ourselves to extra public funding for other things, like international aid.

Which tax cuts are we talking about, and at which level will they be reduced to? Personal environmental taxation will increase and will change public behaviour, leading to reductions in tax receipts for that. Business environmental taxes may slow as David Breaker says, but will that make up the gap? We will have to slow public spending (which we cant as weve pledged to meet Labours spending plans) or raise taxation somewhere else.

Of course theres cutting waste, but Cameron isnt talking about that. Not one word in the LSE speech about more efficient public spending. Nothing about the Quangos.

Increased public spending + environmental tax increases + unknown tax cuts = economic madness.

[William Norton]

James Maskell: correct me if I'm wrong but I understood that we were pledging to match Labour's gross total, but other than in a few key areas such as the NHS we weren't pledging to be line-by-line identical in what we spend. So arguably the policy is to be both revenue-neutral in tax changes and revenue-neutral in expenditure changes.

It's not economic madness, but it does mean that someone has to work what gets cut in order to fund e.g. additional defence spending. So we're going to need a James Review Mk II.