Green taxes (revised)?

Green taxes are all over the meeja again. But this time it seems a little different: it’s not just negative ranting.

For those of us who have wanted this for a long time, this could be good news. Especially if they make it tax-neutral, so that increased taxes on destruction are offset by reduced taxes on productive activity. And they’re even talking about that now: the Tories have said in principle that’s what they want, and the libdems have made specific proposals involving a modest reduction in income tax.

Alas, it’s still all very timid. So here’s a better proposal. First, lets set primary targets not on the increases, but on the reductions: giving us back our hard-earned money. Then move boldly towards them.

My candidate target: move towards the total abolition of that part of income tax known as “National Insurance”. That gives money back both to business and to people. Adding up both employers and employees “contributions”, it’s about half the total tax on earned income for most of us. That leaves deficits both in personal and corporate taxes, which the treasury now has a reasonable case toplug with additional taxes on destructive activities. As an added bonus, it makes the tax system more transparent, and it takes out one of the the most regressive components of it (national insurance falls hardest on middle-earners, with the rich paying proportionally less).

Now, what realistically might happen? It is perhaps instructive to look at the only serious attempt at a green tax we’ve had in this country: John Major’s “fuel price escalator”.

That was accepted at the time, and survived the beginning of Brown’s stewardship of the economy. But in 2000, someone set up a website, and a huge meeja campaign grew up against the escalator, now labelled one of Gordon Brown’s “stealth taxes”.

First there was a campaign, supported with millions worth of free publicity from the likes of the BBC, called “dump the pump”: motorists were exhorted to boycott petrol stations every Monday in protest at “high” prices. Come the first boycott Monday, the petrol stations reported no difference: if anything a slight increase in trade. After the second week, they abandoned the campaign: the silent majority had decisively rejected it.

So, after a couple of months of quiet, they took a different tack. Instead of looking for public support, a few thugs took “direct action”, the kind of thing that would probably be described as terrorist today. But they had support from some prominent public figures: notably the Tory leader of the time: a raving demagogue who shortly afterwards took his party to their worst (but best-deserved) election defeat in … well, certainly in my time. And more importantly – indeed crucially – they again had the support of the meeja: if I might make a cheap jibe, London journalists want their cheap travel to their country cottages (having already priced local people out of the market)!

Having dispensed with the idea that the public (indeed, the motoring public) would support a peaceful campaign, the terrorist campaign was extraordinarily successful. Instead of standing up to the thugs and taking all necessary measures to ensure essential services were maintained (as Mrs Thatcher certainly would have done), the government cravenly capitulated. Green taxes were effectively abolished. I’m not sure, but I have a slight suspicion that retrospective shame at that capitulation may have influenced The Liar to play tough: to defy public opinion next time there was a campaign (supported by the biggest ever peace marches) against going to yet another war.

Major’s escalator was in fact an extremely good way to go. It signalled a change, but gave people and business ample time to adjust to it. What would seriously higher fuel prices really mean?

Well, if travel costs more, it shifts the economic balance in favour of local facilities. And, in our times, online. Those of us in rural areas like here (West Devon) have seen closures of village schools, shops, post offices, etc, as the affluent abandon them in favour of more distant facilities in the towns and cities. The carless (and there are many, especially among the old and infirm) are marginalised: this is social exclusion rural-style. we can bring back more local facilities.

Similarly, if the middle classes (as in the selfish part, as opposed to a liberal fringe) feel motivated to drive less, they’ll demand much better public transport facilities. With increased demand, bus operators will benefit, and can improve their services. I expect there will be some resistance at first from those who scorn the bus, but that won’t last more than a few years. Buses and cyclists are already resented by the arrogant.

In an information age, there’s no excuse for knowledge-workers to be trapped in the old office lifestyle of the 19^th and 20^th centuries. An economic incentive for more people to work at home or in smaller, decentralised offices will be a very strong benefit for all but the office tyrant.

And with fewer commuters on the road, there is less congestion getting in the way of those who really do need to travel. Our road haulage industry complains of congestion costing them billions a year. Yes they’ll pay more for their pollution, butby their own figures they also stand to make a lot of money back.

Of course, some services will cost more. When you need a plumber, his/her fuel costs will have to be reflected in what you pay. Unless of course that too can be offset by reduced congestion, and less time wasted on the roads.

Finally, of course, what better than good economic incentives to investment in R&D on improved technologies for supporting less-destructive lifestyles?