The Case Against Further Green Taxes - Report and Poll

September 02, 2007 11:50 PM


  • GOVERNMENT RAISING £10 BILLION MORE FROM GREEN TAXES THAN REQUIRED TO COVER COST OF UK’S CARBON FOOTPRINT

  • EVERY UK HOUSEHOLD ALREADY OVER-PAYING GREEN TAXES TO THE TUNE OF MORE THAN £400 A YEAR

  • NEW POLL SHOWS BIG MAJORITY BELIEVE POLITICIANS ARE USING GREEN TAXES AS A REVENUE RAISING MEASURE

  • FIRST EVER AUDIT OF UK GREEN TAX POLICY REVEALS EXCESSIVE BURDEN OF ENVIRONMENTAL LEVIES THAT FAIL THEIR OBJECTIVES


The TaxPayers’ Alliance has released the first audit of environmental taxation in the UK alongside a new YouGov poll of more than 2,000 adults (double the usual sample) commissioned into public attitudes towards green taxes.
NEW TPA REPORT – The Case Against Further Green Taxes

Download The Case Against Further Green Taxes (PDF)

The report applies the conclusions of the most prominent experts in the field of climate change research (from the International Panel on Climate Change to academics such as William Nordhaus, “father of climate change economics”, and Sir Nicholas Stern), and compares these studies’ recommendations of the price the UK should be prepared to pay to offset the cost of the UK’s carbon footprint with the actual level of green taxation.  Such a comparison is the only way of knowing whether environmental taxes address root problems or whether they are merely revenue-raising measures.

Covering the main “pollution taxes” of fuel duty; vehicle excise duty (road tax); the Climate Change Levy; Air Passenger Duty; the Landfill Tax and the EU Emissions Trading Scheme, the report investigates each of the green taxes and charges in turn, and reveals that each one has serious flaws:

  • Fuel Duty and Vehicle Excise Duty, net of spending on roads, are already between three and forty times higher than the level needed to ensure that drivers cover the official and academic estimates of the social cost of CO2 emissions  This means that each motorist is overpaying by between £548 and £743 each year.

  • Under the Climate Change Levy, the North East, England’s poorest region, pays over 35 per cent more as a proportion of regional Gross Value Added, than the South East, England’s richest region outside London.

  • The doubling of Air Passenger Duty announced in last year’s Pre-Budget Report is actually likely to have increased total emissions from air travel, incentivising longer flights within the short-haul and long-haul bands.

  • The Landfill Tax, which has been increased a number of times by the current government, is already raising up to £620 million more than would be sufficient to meet the social costs of methane emissions from landfill. Planned new bin taxes are likely to represent yet another supplementary charge on stretched household finances.

  • The EU’s Emissions Trading Scheme has resulted in a £470 million subsidy from the UK to the majority of EU countries that have not placed strict targets for overall reductions in emissions.


The main conclusions of the report are:


  • In many cases, individual green taxes and charges are failing to meet their objectives, are set at a level in excess of that needed to meet the social cost of CO2 emissions, and are causing serious harm to areas of the country and industries least able to cope.

  • Taking an average of the most widely quoted official and academic estimates of the social cost of CO2 emissions shows that green taxes in the UK are already well in excess of the level they need to be to meet these social costs.

  • The social cost of Britain’s entire output of CO2 was £11.7 billion in 2005 but in the same year, the total net burden of green taxes and charges was £21.9 billion.

  • This means that green taxes and charges are already £10.2 billion in excess of the level they need to be to meet the social cost of Britain’s CO2 emissions. This excess is equivalent to over £400 for each household in Britain.

  • Green taxes are therefore already too high if they really are a means of internalising environmental externalities rather than simply revenue-raising measures.


NEW YOUGOV POLL – Public distrust politicians on the environment

Most believe politicians are not sincere on green taxes


  • When asked what they thought the primary motivation was for new green taxes, 63 per cent agreed with the statement: “Politicians are not serious about the environment and are using the issue as an excuse to raise more revenue from green taxes.”  Only 20 per cent thought that “Politicians are serious about the environment and are bringing in new green taxes to change people’s behaviour to help reduce carbon emissions.”


Huge number oppose new council recycling charges


  • A vast majority (77 per cent) disapprove of local councils placing extra charges for bin collection on top of council tax to encourage recycling, including two thirds (65 per cent) who would “strongly disapprove”.


Fuel Duty and Air Passenger Duty seen as unfair taxes


  • 60 per cent think that Fuel Duty is an unfair tax, compared with just 17 per cent who think it is fair.

  • 45 per cent believe that Air Passenger Duty is unfair, compared with 23 per cent who think it is fair.


Trebling Air Passenger Duty would not stop people flying


  • Concern for the environment will not lead people to change their behaviour unless there are significant tax increases – in the realm that most politicians would be unwilling to advocate.  When asked how much extra air passenger duty would have to cost before they chose not to fly, more than two thirds (71 per cent) would only stop flying if Air Passenger Duty was trebled from its current rate. If politicians only doubled it, 81 per cent of people would still choose to fly.


New green taxes must only ever be used to reduce other taxes


  • As a result of this scepticism, there was a very strong view that any new green taxes should not add to the already high tax burden but should be met with reductions in other taxes.  A majority (61 per cent) thought that if extra ‘green’ taxes were raised, “the extra funds should be used to reduce other taxes”.


Public split on further green taxes


  • There is no majority support for moving towards additional green taxes.  When asked whether, “Generally speaking do you approve or disapprove of additional ‘green’ taxes on motoring and air travel?”, 46 per cent disapproved while 45 per cent approved and one in four people “strongly disapproved” against less than one in ten who “strongly approved”.


Most people aware of the high cost they already pay at the pump


  • The poll also showed that most people have a fairly accurate assumption about how much tax they pay for driving.  A third thought the proportion of a litre of petrol costing £1 that was made up of tax was less than 60p.  More than a third (38 per cent) thought it was more than 70p. In fact, the cost of Fuel Duty and VAT charged on fuel purchases is equivalent to roughly 65p in the pound – which one in five people (21 per cent) correctly estimated.


Matthew Elliott, Chief Executive of the TaxPayers’ Alliance said: “The public are right to suspect the motives of politicians.  Not only are they split on whether new green taxes are a good idea, but our research proves that politicians have been using green taxes as a revenue-raising measure and are cynically trying to win support for new ones by exploiting concern about climate change.  We need more honesty about the costs of extra green taxes when British taxpayers already pay some of the highest pollution charges in the world.”   

Corin Taylor, Research Director of the TaxPayers' Alliance said: “Green taxes and charges impose substantial costs on, amongst others, Northern manufacturers and the NHS. Green taxes in the UK are already well in excess of the level they need to be to meet the academic estimates of the social costs of carbon emissions.  Every household is paying more than £400 extra in tax every year because green taxes are set too high.  UK taxpayers are already more than doing their bit to pay for the costs of pollution and additional green taxes would be completely unjustified.”

  • GOVERNMENT RAISING £10 BILLION MORE FROM GREEN TAXES THAN REQUIRED TO COVER COST OF UK’S CARBON FOOTPRINT

  • EVERY UK HOUSEHOLD ALREADY OVER-PAYING GREEN TAXES TO THE TUNE OF MORE THAN £400 A YEAR

  • NEW POLL SHOWS BIG MAJORITY BELIEVE POLITICIANS ARE USING GREEN TAXES AS A REVENUE RAISING MEASURE

  • FIRST EVER AUDIT OF UK GREEN TAX POLICY REVEALS EXCESSIVE BURDEN OF ENVIRONMENTAL LEVIES THAT FAIL THEIR OBJECTIVES


The TaxPayers’ Alliance has released the first audit of environmental taxation in the UK alongside a new YouGov poll of more than 2,000 adults (double the usual sample) commissioned into public attitudes towards green taxes.
NEW TPA REPORT – The Case Against Further Green Taxes

Download The Case Against Further Green Taxes (PDF)

The report applies the conclusions of the most prominent experts in the field of climate change research (from the International Panel on Climate Change to academics such as William Nordhaus, “father of climate change economics”, and Sir Nicholas Stern), and compares these studies’ recommendations of the price the UK should be prepared to pay to offset the cost of the UK’s carbon footprint with the actual level of green taxation.  Such a comparison is the only way of knowing whether environmental taxes address root problems or whether they are merely revenue-raising measures.

Covering the main “pollution taxes” of fuel duty; vehicle excise duty (road tax); the Climate Change Levy; Air Passenger Duty; the Landfill Tax and the EU Emissions Trading Scheme, the report investigates each of the green taxes and charges in turn, and reveals that each one has serious flaws:

  • Fuel Duty and Vehicle Excise Duty, net of spending on roads, are already between three and forty times higher than the level needed to ensure that drivers cover the official and academic estimates of the social cost of CO2 emissions  This means that each motorist is overpaying by between £548 and £743 each year.

  • Under the Climate Change Levy, the North East, England’s poorest region, pays over 35 per cent more as a proportion of regional Gross Value Added, than the South East, England’s richest region outside London.

  • The doubling of Air Passenger Duty announced in last year’s Pre-Budget Report is actually likely to have increased total emissions from air travel, incentivising longer flights within the short-haul and long-haul bands.

  • The Landfill Tax, which has been increased a number of times by the current government, is already raising up to £620 million more than would be sufficient to meet the social costs of methane emissions from landfill. Planned new bin taxes are likely to represent yet another supplementary charge on stretched household finances.

  • The EU’s Emissions Trading Scheme has resulted in a £470 million subsidy from the UK to the majority of EU countries that have not placed strict targets for overall reductions in emissions.


The main conclusions of the report are:


  • In many cases, individual green taxes and charges are failing to meet their objectives, are set at a level in excess of that needed to meet the social cost of CO2 emissions, and are causing serious harm to areas of the country and industries least able to cope.

  • Taking an average of the most widely quoted official and academic estimates of the social cost of CO2 emissions shows that green taxes in the UK are already well in excess of the level they need to be to meet these social costs.

  • The social cost of Britain’s entire output of CO2 was £11.7 billion in 2005 but in the same year, the total net burden of green taxes and charges was £21.9 billion.

  • This means that green taxes and charges are already £10.2 billion in excess of the level they need to be to meet the social cost of Britain’s CO2 emissions. This excess is equivalent to over £400 for each household in Britain.

  • Green taxes are therefore already too high if they really are a means of internalising environmental externalities rather than simply revenue-raising measures.


NEW YOUGOV POLL – Public distrust politicians on the environment

Most believe politicians are not sincere on green taxes


  • When asked what they thought the primary motivation was for new green taxes, 63 per cent agreed with the statement: “Politicians are not serious about the environment and are using the issue as an excuse to raise more revenue from green taxes.”  Only 20 per cent thought that “Politicians are serious about the environment and are bringing in new green taxes to change people’s behaviour to help reduce carbon emissions.”


Huge number oppose new council recycling charges


  • A vast majority (77 per cent) disapprove of local councils placing extra charges for bin collection on top of council tax to encourage recycling, including two thirds (65 per cent) who would “strongly disapprove”.


Fuel Duty and Air Passenger Duty seen as unfair taxes


  • 60 per cent think that Fuel Duty is an unfair tax, compared with just 17 per cent who think it is fair.

  • 45 per cent believe that Air Passenger Duty is unfair, compared with 23 per cent who think it is fair.


Trebling Air Passenger Duty would not stop people flying


  • Concern for the environment will not lead people to change their behaviour unless there are significant tax increases – in the realm that most politicians would be unwilling to advocate.  When asked how much extra air passenger duty would have to cost before they chose not to fly, more than two thirds (71 per cent) would only stop flying if Air Passenger Duty was trebled from its current rate. If politicians only doubled it, 81 per cent of people would still choose to fly.


New green taxes must only ever be used to reduce other taxes


  • As a result of this scepticism, there was a very strong view that any new green taxes should not add to the already high tax burden but should be met with reductions in other taxes.  A majority (61 per cent) thought that if extra ‘green’ taxes were raised, “the extra funds should be used to reduce other taxes”.


Public split on further green taxes


  • There is no majority support for moving towards additional green taxes.  When asked whether, “Generally speaking do you approve or disapprove of additional ‘green’ taxes on motoring and air travel?”, 46 per cent disapproved while 45 per cent approved and one in four people “strongly disapproved” against less than one in ten who “strongly approved”.


Most people aware of the high cost they already pay at the pump


  • The poll also showed that most people have a fairly accurate assumption about how much tax they pay for driving.  A third thought the proportion of a litre of petrol costing £1 that was made up of tax was less than 60p.  More than a third (38 per cent) thought it was more than 70p. In fact, the cost of Fuel Duty and VAT charged on fuel purchases is equivalent to roughly 65p in the pound – which one in five people (21 per cent) correctly estimated.


Matthew Elliott, Chief Executive of the TaxPayers’ Alliance said: “The public are right to suspect the motives of politicians.  Not only are they split on whether new green taxes are a good idea, but our research proves that politicians have been using green taxes as a revenue-raising measure and are cynically trying to win support for new ones by exploiting concern about climate change.  We need more honesty about the costs of extra green taxes when British taxpayers already pay some of the highest pollution charges in the world.”   

Corin Taylor, Research Director of the TaxPayers' Alliance said: “Green taxes and charges impose substantial costs on, amongst others, Northern manufacturers and the NHS. Green taxes in the UK are already well in excess of the level they need to be to meet the academic estimates of the social costs of carbon emissions.  Every household is paying more than £400 extra in tax every year because green taxes are set too high.  UK taxpayers are already more than doing their bit to pay for the costs of pollution and additional green taxes would be completely unjustified.”

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