Response from the Government and Friends of the Earth

August 28, 2008 11:30 AM

We have had an excellent response to our report, with several newspapers supporting our message in their leader columns and a number of politicians voicing their support for our argument. Unsurprisingly, the response from the Government and Friends of the Earth has been less favourable. The Treasury said that:

"The estimate of green taxes is wrong as it includes taxes used to fund core public services, rather than simply offsetting the cost of CO2. For example, while fuel duty recognises the environmental costs of driving, it also pays for important public services, including new roads and public transport and efforts to tackle child poverty."

There are two points to make on that response:


  1. They are making the massive admission that green taxes can't really be defended as environmental measures; they are excessive compared to the harms that British greenhouse gas emissions cause.  They're just taxes designed to sate the Treasury's immense appetite for taxpayers' money.  That is worth remembering the next time they try to sell a tax hike as environmentalism.

  2. Green taxes are generally charged in addition to other taxes.  As we said in our report "people pay for electricity, motor fuels and other goods subject to green taxes with income that has already been taxed; companies that pay green taxes also pay corporation tax; and most green taxes are accompanied by VAT."  That means that green taxes are a premium that is deeply unfair if it isn't justified.  Our report shows that green taxes are excessive and, therefore, constitute an unfair victimisation of various groups, such as those living in rural areas who need to drive.

Friends of the Earth said:

"The TaxPayers' Alliance figures are seriously flawed because they are based on a discredited approach to calculating the cost of climate change - and in fact green taxes have fallen as a proportion of overall taxes since Labour came to power. Green taxes are one of the key policies needed to prevent dangerous climate change that would cost the UK billions of pounds and ruin lives. The Government has fuelled public scepticism by failing to use tax breaks and public spending to make it cheaper and easier to go green. If green taxes are to work the Government must also invest in greener alternatives such as public transport."

Our approach to calculating the cost of climate change has certainly not been discredited.  They don't elaborate on that point but our method for assessing the cost of climate change is based on research by leading academics in the field, the "father of climate change economics" and an IPCC principal author, the IPCC and the Government.  If Friends of the Earth think that the social cost approach is discredited they have a mountain to climb convincing the most prominent experts and authorities concerned with the issue.


The fact that green taxes have fallen as a share of the tax burden since Labour came to power is really neither here nor there.  The TaxPayers' Alliance doesn't need convincing that a range of taxes have seen a big increase, the biggest tax rises were discussed in Mike Denham's report for the TPA - The Great British TaxPayer Rip-Off (PDF).  That isn't relative to the question of whether green taxes are excessive or not at all.


The idea that green taxes may be necessary to prevent climate change and its effects doesn't undermine our report either.  Our research is premised on trying to work out how the harms that are expected to emerge from climate change, based on mainstream estimates, relate to the current extent of British green taxes.  We balance the £4.6 billion pounds that the IPCC estimate, for example, implies Britain's greenhouse gas emissions in 2007 will cost people around the world, now and in the future, against the £24.2 billion of green taxes and find they are excessive by £19.6 billion.  Friends of the Earth therefore clearly can't refute our argument by saying that the impacts of climate change could cost Britons billions.


One point we would agree with Friends of the Earth on is that the Government have fuelled public cynicism with their disingenuous environmental policy.  The Government have fostered cynicism by trying to disguise tax hikes with green rhetoric.


Neither Friends of the Earth nor the Treasury have established any kind of flaw in our report.

We have had an excellent response to our report, with several newspapers supporting our message in their leader columns and a number of politicians voicing their support for our argument. Unsurprisingly, the response from the Government and Friends of the Earth has been less favourable. The Treasury said that:

"The estimate of green taxes is wrong as it includes taxes used to fund core public services, rather than simply offsetting the cost of CO2. For example, while fuel duty recognises the environmental costs of driving, it also pays for important public services, including new roads and public transport and efforts to tackle child poverty."

There are two points to make on that response:


  1. They are making the massive admission that green taxes can't really be defended as environmental measures; they are excessive compared to the harms that British greenhouse gas emissions cause.  They're just taxes designed to sate the Treasury's immense appetite for taxpayers' money.  That is worth remembering the next time they try to sell a tax hike as environmentalism.

  2. Green taxes are generally charged in addition to other taxes.  As we said in our report "people pay for electricity, motor fuels and other goods subject to green taxes with income that has already been taxed; companies that pay green taxes also pay corporation tax; and most green taxes are accompanied by VAT."  That means that green taxes are a premium that is deeply unfair if it isn't justified.  Our report shows that green taxes are excessive and, therefore, constitute an unfair victimisation of various groups, such as those living in rural areas who need to drive.

Friends of the Earth said:

"The TaxPayers' Alliance figures are seriously flawed because they are based on a discredited approach to calculating the cost of climate change - and in fact green taxes have fallen as a proportion of overall taxes since Labour came to power. Green taxes are one of the key policies needed to prevent dangerous climate change that would cost the UK billions of pounds and ruin lives. The Government has fuelled public scepticism by failing to use tax breaks and public spending to make it cheaper and easier to go green. If green taxes are to work the Government must also invest in greener alternatives such as public transport."

Our approach to calculating the cost of climate change has certainly not been discredited.  They don't elaborate on that point but our method for assessing the cost of climate change is based on research by leading academics in the field, the "father of climate change economics" and an IPCC principal author, the IPCC and the Government.  If Friends of the Earth think that the social cost approach is discredited they have a mountain to climb convincing the most prominent experts and authorities concerned with the issue.


The fact that green taxes have fallen as a share of the tax burden since Labour came to power is really neither here nor there.  The TaxPayers' Alliance doesn't need convincing that a range of taxes have seen a big increase, the biggest tax rises were discussed in Mike Denham's report for the TPA - The Great British TaxPayer Rip-Off (PDF).  That isn't relative to the question of whether green taxes are excessive or not at all.


The idea that green taxes may be necessary to prevent climate change and its effects doesn't undermine our report either.  Our research is premised on trying to work out how the harms that are expected to emerge from climate change, based on mainstream estimates, relate to the current extent of British green taxes.  We balance the £4.6 billion pounds that the IPCC estimate, for example, implies Britain's greenhouse gas emissions in 2007 will cost people around the world, now and in the future, against the £24.2 billion of green taxes and find they are excessive by £19.6 billion.  Friends of the Earth therefore clearly can't refute our argument by saying that the impacts of climate change could cost Britons billions.


One point we would agree with Friends of the Earth on is that the Government have fuelled public cynicism with their disingenuous environmental policy.  The Government have fostered cynicism by trying to disguise tax hikes with green rhetoric.


Neither Friends of the Earth nor the Treasury have established any kind of flaw in our report.

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