Tag Archives: Carbon Tax

Tax carbon and reduce poverty

The 2019 Autumn Conference approved a generally good Policy Motion F29 Tackling the Climate Emergency, listing actions which reduce UK emissions to net zero within a few decades. It included point 2d – “Greening the taxation system to make the polluters pay and to reward progress towards net zero.”

This appears to be a statement of intent rather than a genuine action point. I believe that we should go further, committing to a carbon tax designed to:

  1. reduce carbon emissions – globally
  2. fight poverty
  3. protect the UK economy against unfair competition from overseas polluters

This might sound a classic trilemma (three mutually incompatible goals), but one policy can deliver all three. Here’s how.

We currently have a mishmash of carbon pricing measures (Climate Change Levy, Fuel Duty, etc.) which affect specific sectors.

  • These only exert downward pressure on fossil fuel consumption in some sectors, and prices are generally too low to drive rapid reductions.
  • They are potentially regressive, impacting the poor more than the rich.
  • They risk carbon leakage – when emission reduction policies in one country lead to increases elsewhere.

The solution is a carbon tax, dividend and border adjustment.

Posted in Op-eds | Also tagged and | 8 Comments

A progressive carbon tax policy to reduce both CO2 and poverty

Not taxing carbon is a bit like trying to reduce smoking without taxing cigarettes.

Raising the cost of carbon with a comprehensive carbon tax on all fossil fuels, collected at the point of production or import, uses market forces to reduce CO2 emissions in a very cost-effective and efficient way. Both energy efficiency and the use of low-CO2 energy are encouraged.

It applies to all sectors, including heating, industry, electricity generation and transport.

Fossil fuel subsidies, for example, tax breaks on the North Sea oil and gas, are a negative carbon tax and should be withdrawn.

If the money raised is paid back as a dividend to all UK residents on an equal-per-head monthly basis, then people with a below-average total carbon footprint (i.e. those for whom the dividend payments exceed the effect of price rises due to the tax) are subsidised by those with above-average footprints. Children can be rated at half the adult rate, which can be added to Child Benefit. The dividend, a form of UBI (Universal Basic Income), makes the policy progressive. Poor people’s limited total spending power means their total carbon footprint is almost always below average, even including increased home heating costs, making them winners; as will nearly all people in fuel poverty. Overall, poverty is reduced.

Posted in Op-eds | Also tagged | 6 Comments
Advert



Recent Comments

  • David Evans
    Yet another article saying "Vote for what the powers that be want - a small, centralised, all-powerful and most importantly easily controlled group to surround ...
  • John Medway
    @Brad Burrows - I agree entirely (apart from the figures you have since corrected). I may have given the impression that I think inflation is an unalloyed evil,...
  • Barry Lofty
    Sorry just revisited my earlier post and realised I should have written " tiny steps"???...
  • Roger Billins
    I have just watched Edge of War, the film based on Robert Harris’ novel, Munich. A brilliant film but the similarities of where we are with Russia now are sta...
  • John Marriott
    My first response, rather tongue in cheek, was “You pay them”. Call that cynicism if you like; but I sincerely believe that councillors should not be out of...