It's time to reframe "green taxes"
Today, Business Green reports that several of the UK's leading green entrepreneurs have written to the new energy and climate change secretary, Ed Davey, setting out a policy wish list for clean technologies.
Interestingly, they have also urged him to "stimulate green jobs and communicate a more compelling narrative that UK competitive advantage lies in creating a ‘sustainable green economy'".
One demand that caught my eye was a shift in the debate on green taxes.
"We ask that you adopt the 'polluter pays principle' by incentivising clean purchasing behaviour with 'green incentives' while collecting 'pollution taxes'," the letter states. "The oxymoronic language of 'green taxes' confuses the public that renewable energy will continue to add costs to consumer bills while the converse is the case – renewable energy will actually reduce consumer bills."
The eco-entrepreneurs are on to something. The latest British Social Attitudes survey, carried out largely in the summer of 2010 and published in December 2011, indicated that there was less support for green taxes than was the case a decade earlier. Only around a quarter of respondents said they would be willing to pay much higher prices or taxes to help the environment. Such a result is hardly surprising in these austere times.
But “green taxes” aren’t always what they seem. The Office for National Statistics defines an environmental tax as:
a tax whose base is a physical unit such as a litre of petrol, or a proxy for it, for instance a passenger flight, that has a proven specific negative impact on the environment.
This covers Landfill Tax, Aggregates Levy, Climate Change Levy, EU Emissions Trading System, Fuel Duty, VAT on Fuel Duty, Vehicle Excise Duty, Air Passenger Duty and the Renewable Energy Obligations.
But Treasury has been (slowly) working up a broader definition, focused on meeting green policy aims and effecting behaviour changes that are good for the environment. The latest draft, as provided to the Commons Environmental Audit Committee, takes in the above list but excludes fuel duty, VED, Air Passenger Duty and the Renewable Energy Obligations. It covers the Carbon Reduction Commitment and the Carbon Floor Price.
By leaving out transport measures, the Treasury’s draft definition risks making the level of environmental taxation less transparent. Meanwhile, the Daily Mail has for months lumped together a selection of energy and climate change policies as “green taxes” or “green stealth taxes”, and claimed, erroneously, that such measures are responsible for recent hikes in power bills. (For Carbon Brief’s takedowns of the Mail’s allegations, click here.)
With the point of “environmental taxes” lost in this melee, we need some new frames. “Pollution taxes” is a good start. And how about “clean energy incentives”? Or a revival of the Lib Dem pledges from the 1990s to “tax bads not goods”? Any other ideas?