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Green Taxes

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In October 2006, former economist Sir Nicholas Stern published a report which analysed the economic impact of global warming. He described climate change as the 'greatest and widest ranging market failure ever seen', warning that it may cut global annual economic output by up to 20% and that drastic action would be needed to prevent this. Taxation was just one of many mechanisms he recommended to slow down the rate at which we pump greenhouse gases into the air and demonstrate to people the full social costs of their actions.

The Stern Review roused all Britain's major political parties into action.

• The Conservative Party's Blueprint for a Green Economy advocated taxes on motoring, domestic flights, home improvements, parking at work, higher taxes on gas-guzzling 4x4s and a restriction on airport expansion.



• Labour's Environment Secretary, David Miliband, called for measures to combat 'car use and ownership', and a 'substantial increase' in road tax. And in his Pre-Budget Report, the Chancellor announced plans for a new green tax on flights, which would discourage airlines from flying half-empty planes.



• The Liberal Democrats announced a whole raft of measures to combat climate change, including a Green Tax Switch, which would increase taxes on pollution and the production of greenhouse gases, and hand the money back in income tax cuts.

Although some of the parties have shown less than wholehearted commitment since going public on these ideas, the squabbling to be at the front of the queue with green tax proposals is a sign that they are starting to recognise both the magnitude of the problem and the concerns of ordinary people.

Environmentalists, though, want green policies go far beyond tax changes. Friends of the Earth says: 'Taxation is one tool to affect prices, alongside other market instruments, such as emissions trading schemes. Other measures are also needed, such as government support for new technologies and improved information-based measures, like eco-labelling.'

Writer and campaigner George Monbiot says that the Stern Review 'appears to have demonstrated what many of us suspected: that it would cost much less to prevent runaway climate change than to seek to live with it.' He believes, though, that 'The principal costs of climate change will be measured in lives, not pounds,' and that 'there would be a moral imperative to seek to prevent mass death even if the economic case did not stack up.'

Can green taxes go any way towards slowing down the rate of environmental destruction or are they fiddling while Rome burns?
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