An interesting editorial in yesterday’s (16 March) Financial Times set out some strong arguments for a carbon tax. These include the point that it is better to tax something that is environmentally bad rather than tax things which are socially good such as incomes.
To be fair, there are some issues to be ironed out. A basic carbon tax would be regressive, impacting harder on poor people than richer people. For example, the lone pensioner in a cold and draughty house should not have to pay more for heat. Prof Kevin Anderson at the Tyndall Centre at Manchester University has made this very point, that for equity reasons the carbon footprint of the poorest people in society does need to increase. This would be more than offset by much larger carbon reductions elsewhere.
There would also need to be some industrial transitions for sectors which are either high energy consumers or high CO2 emitters or both.
For the Built Environment sector, cement and concrete production is both a high energy and a high CO2 emitting process. Industry looks for tax and regulatory stability when making investment plans, therefore it would be best to start now with a carbon tax escalator, rising in a pre-planned way year by year, rather than having a carbon tax introduced later in a hasty dash to catch up with economic and environmental pressures.
All the predictions for the coming Budget (20 March) are for a gloomy future of further recession, deficits, debt, cuts and austerity. This is the moment to be seized for low carbon sustainable development, starting with global leadership through a UK carbon tax.
If Carbon Taxes are implemented the Exchequer need to switch to consumption taxes like this but parri passu with equivalent reductions in income taxes.Thus abolishing income tax up to £50,000 ceiling (say) but transfer the lost income onto all forms of energy as a flat rate per gigajoule fuel tax on oil, petrol, wood, RDF, gas,coal or (in the case of CHP Crematoria in Worcester) on bodies.
For a discussion on Carbon Tax from the USA please see – http://www.carbontax.org/who-supports/scientists-and-economists/