Green budget? More like dirty brown

Posted by benet - 12 March 2008 at 3:06pm - Comments

Budget 2008

We were promised the "greenest budget yet". We've been given a budget that's dirty brown. Instead of grasping the opportunity to restructure our economy to deal with the threat of catastrophic climate change, the Chancellor has actively damaged his environmental credentials and hurt efforts to reduce UK CO2 emissions.

It is not just that the green taxes announced will be ineffectual; it's that there is no recognition of the scale of the problem or fundamental changes needed if we are to decarbonise our economy.

Let's start by looking at the so-called big-idea on gas guzzlers. Alistair Darling has proposed a first year tax charge on the sale of new high-emitting vehicles. As a concept, it's fine (although the level of tax is hardly likely to make a difference if you are already shelling out for a new Chelsea tractor). But there is a more fundamental problem: what is going to happen to the money?

Green taxation is an important tool in the armoury of government as it seeks to encourage good behaviour and stop our polluting habits. Putting up the cost of one activity should encourage us to do another.

However, for any new tax to work, it has to have popular support. The poll tax riots showed what happens to politicians who introduce taxes which the public don't like. And this is where Alistair Darling is running into problems.

The Treasury hate linking money raised by one tax with spending on another area. For example: spending the proceeds of aviation taxes on financing new railways. In economics jargon it's called hypothecation; in the real world it's called common sense; but in the Treasury it's called heresy. To do it would mean giving up power - power built up over many years - and no politician likes to do that.

Yet, if the public are to support green taxation, they have to know that the money is going to a good cause. If the extra cash raised by taxing a gas guzzler goes towards bailing out the national debt then it will just cause resentment. If an extra 2p on a litre of petrol goes to finance the Northern Rock, then of course we will see more fuel protests.

There was nothing in today's speech which recognised this or attempted to address issues of public acceptability. In fact it was worse. By claiming that his measures are green, he simply undermines support for the measures we need if we are going to change behaviour.

Others can decide whether this budget is good for the economy in the short term. It is clear to us that it will do nothing to help the fight against climate change, and that is a disaster in the long term.

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