Monday, February 05, 2007

Environmental Taxes

I would ringfence the increase in Air Passenger Duty to ensure the money raised went towards environmental causes. The current situation where it goes into the central tax fund is CRAP.

3 comments:

bgprior said...

Hypothecation - not usually a good idea. The government would have to make judgments about how to spend our money in our interests. That's not usually as good as giving us the right incentives and letting us decide how to respond to them and our own preferences.

Environmental taxes don't have to be a con, but I agree with PH that a sure sign that they are is where they are set at a level that doesn't change behaviour. The Climate Change Levy is another good example.

This environmental tax is even worse, because it has a very imperfect relationship to the environmental impact. Some of its provisions, such as being halved for the lowest class of seats and being significantly higher for flights to some countries than to others, even where the latter are closer than the former, are driving decisions in opposite directions. The exemption for planes of less than 20 seats (I simplify for the sake of brevity) is contributing to the strong growth in the use of executive jets, which is hardly an environmental objective.

James E said...

My post was a direct response to the raising of the APD earlier in the year. I believe, if you're claiming to be raising taxes for a reason, you then can't justify putting the money into the general tax fund.

I agree hypothecation is usually not a good idea.

I would rather see incentives and innovation in reducing our environmental impact rather than taxes. I read an interesting article by Richard Branson the other day: apparently if planes were towed out to the runway rather than having their engines running whilst queuing, there would be a 90% reduction in emissions on the ground at major airports. Simple but effective.

bgprior said...

I believe, if you're claiming to be raising taxes for a reason, you then can't justify putting the money into the general tax fund.

The various duties on fuels, alcohol, tobacco, gambling. Climate-Change Levy. Vehicle-excise duty. Landfill tax. Aggregates levy. These are all taxes "for a reason". If we were to adhere to your rule, we would be spending far too much on pointless exercises.

The use by the government of funds from the landfill tax is already a colossally wasteful, bureaucratic disgrace, that either achieves nothing (apart from burning money) or skews the market to deliver ends that government myopia believes to be worthwhile, but which are actually pointless or often counterproductive.

We need to do away with this dirigiste nonsense, not enhance it.