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DAILY MAIL – 21/07/2010
This article comments on plans being considered by the Coalition Government to increase the rate of stamp duty on properties that do not meet energy efficiency targets, an initiative that would be introduced alongside the Government’s Green Deal. Under this deal householders would be offered new insulation, double glazing or replacement boilers by energy companies, local councils or DIY chains from 2012, with the money spent claimed back from savings made in energy bills. Amidst concerns that such incentives will not be sufficient to motivate buy-in to the scheme, it has been proposed that variable stamp duty rates based on the energy efficiency of homes could provide an additional nudge. To avoid paying the higher stamp duty, a home would need to be upgraded to at least a band E energy performance certificate rating. Read the article…
A similar article in the Guardian suggests this proposal could add £850 to the cost of buying a typical home, and require owners to spend at least £15,000 on improvements before they would trigger a rebate. If homeowners sharply improved the rating within a year – through enhancing insulation measures or perhaps through adding solar panels – they may be eligible for reclaiming up to twice the amount of the green tax from a Green Investment Bank. The article highlights concerns raised by the property industry that such a measure would hit the young and low paid, and hinder the industry’s already fragile recovery.
THE IRISH TIMES – 06/11/09
This article highlights findings released by Sustainable Energy Ireland (SEI) indicating that tax incentives aimed at encouraging motorists to buy greener more energy-efficient cars are working; the percentage of energy-efficient cars purchased has risen rapidly since the introduction of new vehicle registration and road tax bands in July 2008. The number of cars in the most efficient energy bands – A, B and C – constituted 73% of new cars purchased after the introduction of the new rates, compared with just 43% for the first six months of 2008. This has not, however, entailed a shift towards smaller engine sizes; instead, diesel cars have doubled their share of sales between the first and second halves of 2008. The report also conveys a 6.7% reduction in road freight energy use in 2008, reflecting the downturn in construction activity and the economy in general. Read the article…
DELOITTE INSIGHT – 07/09/09
This article highlights the various forms of eco-tax that have been introduced and/or proposed across the globe. Mentioned are Taiwan’s plans for an energy and environment tax to be implemented in 2011; plastic bag taxes in Hong Kong and Ireland; Japan’s removal of duties on biofuel and lowering of taxes on cars with low emissions; China’s taxes on energy consumption and tax incentives for companies which reduce water consumption; Sweden’s waste taxation; Norway’s taxation of certain products which contain fluorine; and the UK’s doubling of its air passenger duty in 2007. The article highlights the benefits of environmental taxation in modifying behaviour, raising revenue, and incorporating the costs of environmental damage into the prices of goods and services. It also, however, raises the drawbacks including evasion measures (such as illegal landfills and illegal sales of fuel) and the distributional issues. Read the article…
A follow-up article focuses more specifically on the potential for environmental taxes in Malaysia…
THE TELEGRAPH – 20/07/09
Policy Exchange has released a report warning that the proposed ‘pay-as-you-throw’ bin taxes could result in more waste going to landfill because resentful households refuse to reduce rubbish or are so confused by too many bins that the recycling is contaminated and therefore has to be dumped. The report sets out a range of alternative measures that could be brought in to improve the current recycling system but argues that the Government’s proposal to introduce a ‘bin tax’ will only discourage recycling. Read the article…
THE BOSTON GLOBE – 25/05/09
This article suggests that a gas tax is a key missing component of the Massachusetts Senate’s recent passage of a tax package. It highlights the need to get serious about moving away from a CO2-emitting, petroleum-based economy, and suggests that a gas tax is needed, not just to provide a source of funding to fix crumbling infrastructure, nor just to create jobs, but also to encourage the move toward more efficient cars, hybrids and plug-in electric vehicles. It draws on the responses to last summer’s gas prices to argue that people do adjust their behaviour to sustained price signals. Above all, the article calls for the political will to ‘use the tools available only to our government to give us a nudge in the right direction. And the gas tax is precisely the nudge we need’. Read the article…
THE SUNDAY TIMES – 17/05/09
This article highlights that more than four out of five cars bought in the past nine months are ranked as among the least polluting in the country. Since the changes to vehicle registration tax and road tax introduced in July last year, car buyers appear to be ‘voting with their wallets’ and avoiding cars that do not perform well in environmental terms. Approximately 83% of cars purchased since the change are in grades A, B and C (those with lowest emissions) and almost 55% of the cars bought were classified in the A and B bands. New statistics suggest that buyers faced with the choice of two otherwise similar cars of the same size and engine power are choosing the one that produces fewer emissions because of the lower purchase price and running costs. Alan Nolan, director general of the Society of the Irish Motor Industry, suggests however that ‘incentivising people to buy environmentally-friendly cars is a waste of time without a scrappage scheme…the vast majority of new cars being bought are environmentally-friendly and have low CO2 outputs, but people are not being encouraged to replace older vehicles with environmentally-friendly ones’. Read the article…
THE NEW YORK TIMES – 04/05/09
This article argues that the US will need more than just fuel efficient cars to curb its driving-related carbon emissions, and suggests that important lessons could be learned from Europe and Japan. It suggests that public transport in these countries ‘outshines’ anything seen in American cities, that cars are smaller and lighter, and that more people now buy diesel-powered cars, which get better mileage per gallon at less cost than gasoline. The article also highlights how European governments were able to steer drivers to diesel by taxing it a lower rate than gasoline, but that in general both fuels were taxed at a much higher rate in Europe than in the US which, the article says, points to another lesson; higher fuel taxes reduce consumption. Lee Shipper, a transportation expert at Stanford University, says ‘low prices are a curse…I believe that carbon, oil and energy security are underpriced. It makes public policy sense to do something akin to boosting the price.’ Following the surge in gasoline prices in the last two years, the US has seen increasing numbers of drivers leaving their cars at home, with use of trains and buses rising to a 52-year high (according to research by the American Public Transport Association), and the total mileage driven on the nation’s highways has fallen for 13 consecutive months. Read the article…
LSE Researcher, Ralf Martin, recently wrote a blog entry highlighting how Governments should seize the opportunities arising from the current economic crisis to ‘promote pro-environmental fiscal stimuli and to embrace future pollution taxes to pay for them’. Specifically he highlights that the global economic crisis demonstrates how one global system can suffer from failures that build up slowly over a long time as a result of behaviour that each nation found individually rational, and that such crises can be extremely costly to address once ‘too late’ even where measures to avert them early on would have been relatively cheap (note the parallels with climate change). Most governments are now proposing plans for fiscal or spending stimuli to soften the impact of economic recession; this blog entry suggests that such government handouts could come in the form of the investments required for making the transition to a carbon-free economy. Such measures need not be politically unpopular e.g. the provision of subsidies for energy-saving refurbishments of houses. Fiscal stimuli of any form will need to be paid for by tax increases; Ralf Martin suggests that, rather than taxing people for being productive (e.g. by raising income tax), it would make much more economic sense to tax damaging activities such as pollution. Careful and considered design of these pollution taxes could work to address their regressive nature, an argument oft-cited against their implementation. The blog entry concludes by stating that the ‘damage being wreaked by the global economic crisis is nothing compared to the environmental credit crunch that could occur in the future’. Read the blog entry…
REUTERS – 30/01/09
The European Union’s Tax Commission, Laszlo Kovacs, is expected to propose a reduction in the tax rate of a number ‘green’ products and services in April. Whilst the current tax rate is based on energy content, Kovacs will propose that this be split into two components – energy content and carbon dioxide emissions, so as to provide tax and price advantages to renewables. The proposal will also suggest a reduced rates on a limited number of energy efficient or environmentally friendly products such as insulation and some other building materials and household appliances. Read the article…
THE NEW YORK TIMES – 04/01/09
This article suggests a number of New Year’s resolutions that the New York Times thinks Barack Obama should make, the first of which is a gasoline tax. It suggests that, whilst raising taxes during a recession might be hard for Congress to fathom, ‘it’s precisely while the memories of wallet-busting trips to the pump are still vivid that a modest increase could be levied’. They argue that the tax could be elastic, depending on the average price of a gallon. Importantly, expectations of higher gas prices over time would condition consumer behaviour and give drivers an incentive to buy more fuel-efficient vehicles. By gradually imposing the tax, the US automakers would time to modify their fleets and catch up with Asian producers. Read the article…
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