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Green taxation

Green taxes are supported by all three political parties as a way of influencing consumers to reduce their impact on climate change and pressure on global resources.  Green taxes involve making energy intensive products and services (e.g. car and air travel) more expensive, thereby making ‘green’ options more attractive and reducing carbon dioxide emissions.  Although controversial, green taxes remain high on the policy agenda and were recommended as one of the ways to tackle climate change in the Stern Review.

What are the implications?

• The potential to reduce greenhouse gas emissions and ease pressure on global resources if green taxes cause the desired behaviour changes.
• Growth in ethical living and consumerism as ethical choices become easier to make.
• Growing markets for energy efficient products.
• Possible reduction in global population movements if the cost of air travel rises.
• Possible rise in homeworking and teleconferencing to reduce travel.
• Possible counter trend to falling costs of ICT if technologies become more expensive.
• Risk of deepening inequalities if those on lower incomes are unable to afford energy efficient products.

Moving forward

Green taxes put the emphasis on individual and organisational action to reduce their impact on the environment.  In addition, there is increasing pressure from funders and the public for organisations to be environmentally sustainable and responsible.

• Does your organisation understand the impact its services and practices may have on the environment?
• Has your organisation got the reporting systems in place to demonstrate and communicate this?
• What changes could you make to make your organisation more environmentally friendly?  For instance, is it always necessary to travel long distances to meetings? 

Could you use the train?  Is there a cycle-loan scheme for staff?  Could you invest in an eco-audit of your services?

Want to know more?

Reducing the impact of 'green' taxes and charges on low-income households

Published by: Joseph Rowntree Foundation

Date: 2004

Format: Web

What is it?  This paper explores the concern that ‘green taxes’ could hit lower income consumers disproportionately.

How useful is this? This report looks at low-income households' use of energy, water and waste disposal services, and of cars where they own them.  It finds that usage is disproportionate in relation to their income and that a flat-rate tax or charge applied to such usage would be regressive.  It considers whether any negative impacts could be reduced if the tax or charge were designed appropriately, or if a compensation scheme were introduced.  Taxes and charges will cause some to reduce their consumption, but where this causes unacceptable hardship the report suggests special arrangements may help but points out that it may be necessary to tackle the underlying cause of the hardship (such as energy-inefficient buildings) if pricing is to be used as an instrument of  policy.

Government Should Intervene On Climate Change … Just Don't Tax Us

Published by: IPSOS-MORI – a large research company with a specialism in public affairs

Date: 2007

Format: Web

What is it? A statistical analysis of public attitudes towards policy measures to tackle climate change.

How useful is this? Although a short article, this includes some useful statistics and ideas.  The article is focused on public attitudes towards the role of government in mitigating climate change, but also includes a section on attitudes towards green taxes with an interesting comparison to attitudes towards the London congestion charge.  

Other comments: This article uses information from a larger report: Tipping Point or Turning Point, Social Marketing & Climate Change.

Public Engagement on Aviation Taxes

Published by: Loughborough University for the Sustainable Development Commission

Date: 2007

Format: PDF (158.6KB)

What is it?  A research paper examining the arguments around the acceptability of current and potential future aviation taxes.

How useful is this? This paper provides interesting insights into attitudes towards aviation taxes, as one form of green taxes.  Using qualitiative research methods it examines: attitudes to the environment; environmental issues associated with aviation; measures to reduce aviation emissions; acceptability and attitudes towards existing aviation taxes; measures on which to spend any additional revenue from aviation taxes; possible future tax and charging systems for aviation; and likely behavioural response to price signals.

Green Tax Report 2009

Published by: CIOT (The Chartered Institute of Taxation)

Date: 2009

Format: Web or PDF

What is it?  An in depth report examining what we understand by green, or environmental taxes, the differing characteristics of these taxes and what needs to be done in order to instigate a movement of change based around them.

How useful is this? This report, using the Stern report as a backdrop, initially looks at the economics of climate change and putting forward policy change recommendations focussed around increased regulation, information and financing.  It goes on to discuss the rise of environmental taxation, its various incarnations and how they are perceived by the public.  It looks at revenue, effectiveness and compliance levels of taxes already in operation (in both the UK and other developed countries) and touches upon what changes are likely to happen in the near future.  This report is particularly useful for those wanting a broad yet detailed overview of the economic characteristics of environmental taxation as well as an indication of where government policy currently stands and where it is likely to move in the future.

Other comments: The report can be read in its entirety online here, including a response paper by KPMG.