Six million new jobs and we meet our carbon targets

Six million new jobs could be created across the EU – an increase in employment of 2.7 per cent – if a programme of green fiscal reform was introduced. A green tax shift would also enable the EU’s carbon dioxide reduction targets to be met.

This was the message from new research presented at a major international conference held in London on 15th and 16th July organised as part of the Anglo German Foundation’s PETRE project in conjunction with the Green Fiscal Commission.

Commenting on the research findings the conference chair, Professor Paul Ekins, said, “This research shows that a really strong programme of green fiscal reform across Europe will benefit the economy as well as reduce carbon dioxide emissions. It is not clear that Europe’s targets for reducing carbon dioxide emissions can be met without such a tax shift, but achieving them in a way that also increases employment makes the arguments for this policy absolutely compelling.”

 The conference also presented evidence to show how a green tax shift can increase innovation in key environmental industries, and give results for its impacts on countries outside Europe. The conference concluded with a discussion of  the political issues related to the implementation of the green tax shift with MPs from the major political parties.

Presentations from the conference will be made available shortly on the Green Fiscal Commission and PETRE project websites. The final report from the PETRE project with full details of the research will be launched in October.

Trade and Climate Change – WTO/UNEP report

A new report has been published jointly by WTO and UNEP on Trade and Environment. This has sections summarising the science of climate change, an economic analysis of the links between trade and the environment and a review of climate change policies at the international and national level.

Interestingly the report is positive about the acceptability of border measures to level the playing field between firms subject to national carbon or energy taxes and importing firms subject to less stringent environmental regimes.

The  report provides clarification on the conditions under which border tax adjustments may be compatible with trade rules and therefore opens some interesting areas for further development which previously appeared to be stalled in policy terms. The Green Fiscal Commission will be publishing a briefing paper on Border Tax Adjustments later in the year as a contribution to this debate on the issue, which may perhaps now be reinvigorated following this WTO/UNEP contribution.

TaxPayers’ Alliance wrong on green taxes – again!

The TaxPayers’ Alliance (TPA) claimed yesterday that ‘The public are paying a fortune for green taxes and regulations that do little to reduce emissions but massively push up the cost of everything from driving and flying to heating our homes.’

This statement seems to fly in the face of the evidence on the effectiveness of green taxes that the Green Fiscal Commission has recently reviewed in detail. This shows that green taxes are an effective means of reducing environmental impacts. They also have other benefits such as raising revenues that government needs to operate in the public interest and increasing jobs through allowing other taxes, such as those on labour to be reduced. This evidence is summarised in the Commission briefing How Effective are Green Taxes? 

The TPA may not like green taxes, but they are wrong to claim they are ineffective. The TPA seems to be developing a track record of coming to unjustified conclusions on green taxes. A previous report from the TPA on green taxes came to similarly questionably conclusions. This was reviewed by Prof Paul Ekins of the Green Fiscal Commission who viewed, ‘its analysis to be flawed’ and that it contained, ‘a number of examples of quotation out of context and misrepresentation to the extent that it is positively misleading.’

Interestingly the Daily Mail coverage quotes Philip Hammond, shadow Chief Secretary to the Treasury, who said, ‘Conservatives have always said they support a gradual shift in the tax system away from taxes on incomes and savings towards taxes on pollution.’ This quote highlights the need to consider green taxes in the broader context of overall tax policy and environmental objectives. Green taxes need to be increased if we are to have any chance of addressing climate change, but they can also be used to reduce taxes on other activities we consider desirable, such as income and profits.

‘Provisional estimates of traffic in the third quarter of 2008 have revealed a small but significant drop in traffic compared to the same quarter last year’

The latest traffic statistics from the DfT show a small but significant drop in traffic between the third quarters of 2007 and 2008. There was a decrease for just about every type of road (motorways, rural and urban ‘A’ roads and minor roads) and vehicles (cars and HGVs) decreased. What might be causing this? Has the effect of increased fuel prices reduced demand for travel and/or stimulated more efficient use of vehicles? Or is the drop an early indication of reduced economic growth? The former would seem to be an important factor and we will be looking at the data on traffic volumes, fuel price and economic growth more closely to explore this further and see what evidence it provides to support the idea of a green tax shift. See DfT statistics…