A slight confusion here I think over the correct role of taxes upon environmental externalities:
VAT should be imposed on all international air tickets from Britain and
the rest of the European Union in an attempt to reduce greenhouse
gases, a committee of MPs has said.
The 17.5 per cent increase in prices would trigger protests from
airlines and passengers, but the all-party group maintains that it is a
price worth paying to protect the environment.
The
Environmental Audit Committee also wants Air Passenger Duty, which was
frozen in the Budget for the fifth consecutive year, to rise from its
average of £15. It proposes new taxes on flights within the EU, and a
government levy on domestic flights for the first time.
Not that I particularly like the idea of anyone raising taxes ever but there is a role in taxation being used to internalise the external effects of certain actions: correcting for the fact that the market does not already account for them.
The committee also said that cars with large engines which produce
the most carbon emissions should be more heavily taxed, with drivers of
the worst polluters paying up to £1,800 a year car tax.
Drivers of gas-guzzling cars such as the 4 X 4 Toyota Land
Cruiser Amazon currently pay less vehicle excise duty than owners of
smaller cars producing less emissions.
You shouldn’t be taxing the ownership: that’s not actually what you care about. What you care about is the emissions so you should be taxing them. That means raising fuel duty once again. If, in fact, fuel duty is still too low to include the external effects of its use. Given that we already have perhaps the highest fuel duties in the world this might be a difficult claim to support.
“Air passenger duty should be raised, so as to slow the growth of aviation and stabilise its absolute level of emissions.”
Ah, no, that is precisely wrong. Environmental (or externalities based) taxation is not about detering specific activities people disapprove of, not of choking off demand for a particular good or service. It is about making sure that all activities have included in their market price all the external efects. So with flights, for example, we need to work out the actual costs of CO2 emissions, noise and so on. Then a tax should be applied which is exactly equal to that cost. Not lower and not higher, but equal to.
We have thus internalised the costs into the prices in the marketplace and people will see the full costs of their actions. This is, by the way, exactly what Teddy Goldsmith was arguing for in "Blueprint for Survival" all those years ago, it’s a terribly green idea, one that has become mainstream nowadays.
If we don’t start our dicsussions of green taxation from the right point, we’re never going to get the taxes themselves correct.
For example, if VAT goes on plane flights, it really ought to go on train tickets as well.
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