Monday, Sep 14, 2009
The tax that bare not speak its name
New Scientist: Better world: Tax carbon and give the money to the people
This is a interesting article - strange that we never see this in the main stream press, but in a science journal. Taxing assets in this way has many benefits to the economy and would stimulate the real economy. What the article fails to say is the real reason we will never see a carbon tax as well as a land value tax is because powerful vested interested holds this wealth for their monopolistic advantage and do not want governments using it for building schools or hospitals or for sociable good.
Posted by the number cruncher @ 10:13 AM (342 views) Add Comment
9 Comments
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1. mark wadsworth said...
Fair point, but we already have taxes on carbon, primarily fuel duties and VAT, but also the 20% higher rate of tax on North Sea profits. Whether these are too low or too high is a different debate.
For that matter, we already have taxes on properties (Council Tax, Business Rates, IHT, CGT, Stamp Duty etc), it would just be much better to replace them all with proper LVT (at whatever rate).
2. letthemfall said...
Quite a collection of interesting articles attached to this one. A carbon tax would in theory tax pollution more equally (domestic fuel taxed at only 8% at present), but there are other sources of environmental impact that could also be taxed - which roads cars are used on (road pricing), for instance; or on recreational burning of fuel (eg motor racing, boating). The wealthy proportionately produce more pollution because they in general consume more, so it is a form of redistribution of wealth, something which is much needed if we are to see a healthier society, although this should also be addressed through income tax.
3. drewster said...
letthemfall,
You're only looking at individual carbon users, ignoring business. For example steel-making requires a lot of energy (traditionally coal). If we slap a carbon tax on the coal used in steel-making, then the industry will just move to China. Importing a steel bar from China probably uses slightly more carbon (because of shipping) but it would be much cheaper because there would be no carbon tax. Do we really want further de-industrialisation of the UK economy?
4. the number cruncher said...
Private interest have found it very hard to monopolise north see oil - try as they might. Hence a easier target for taxation.
Fuel duties are a purchase tax and not a direct tax - a subtle difference but an important one. This is the same as with LVT and other property taxes. If you tax carbon directly at source it promoters innovation in carbon use and decreases the assets value. A purchase tax on carbon or even worse a trading tax with a cap on it actually increases the assets worth for the private asset owner.
5. the number cruncher said...
drewster
A true direct carbon tax would tax carbon at source or import - so primary goods such steel imports would be taxed for their total carbon use, wherever they are manufactured. The problem comes with complex systems such as consumer goods and services.
The benefit comes from the fact that income taxes would be reduced so making labour cheaper in the UK and increase our competitiveness in the production of value added goods.
Lots of benefits for clever hard working people.
6. drewster said...
CONSIDER this injustice. Governments tax labour and profit, the engines of prosperity, while pollution and the depletion of resources - arguably the greatest threats to our economic well-being - remain largely untouched. So while we're thinking about how to rebuild our broken economies, here's a plea for a new cornerstone: a universal carbon tax.
In principle I agree - for the same reasons as Land Value Tax. However the exclusive focus on carbon is misguided. Pollution is more than just atmospheric CO2. There are particulates, nitrogen oxides (NOx), dioxins, river pollution, sea-water pollution, toxic land, noise pollution, etc. The most obvious issue is petrol vs diesel: a petrol engine emits more CO2, but a diesel engine emits more particulates and more noise pollution. These issues vary geographically - a dirty diesel taxi in London will affect far more people than a petrol car in the Scottish highlands - yet the petrol car will pay more carbon tax.
Separately, the analogy with LVT isn't clear-cut. The land in Britain belongs to the people of Britain, and if you tax it you can't move it to Monaco or the Cayman Islands. However, the oil and gas that we burn increasingly doesn't belong to us (it's imported). If we cut back our usage (through a carbon tax) then other countries will simply increase theirs. Oil and gas are fungible.
7. drewster said...
Oops - forgot to mention depletion of resources. Carbon-based fuels aren't the only resource in short supply. Metals and rare earth metals in particular are also a problem. Still it might be worth a try. I'm fond of saying: Don't let the perfect be the enemy of the good.
@number cruncher,
It's fairly easy with steel, since the manufacturing process is well-known and can be quantified. However what if the Chinese claimed they were producing steel with hydroelectric or nuclear power? Would we be able to verify their figures? Technically they could divert all hydro-power to steel mills, and use coal-fired power-stations for their domestic electricity needs instead. Power is fungible, at least over a few hundred miles.
8. letthemfall said...
drewster
Little steel is manufactured here now, but you're right: such taxes would have to apply nationally for the benefit to be global as it has to be. Certainly the many sources of pollution need to be included, such as the noise pollution suffered by the less well-off who endure the well-off who live away from main roads driving past their house. All very complex, but too important to be left just to the market in my view.
9. letthemfall said...
internationally, I meant to say.