The call comes ahead of a report to be published tomorrow by the Green Fiscal Commission (GFC), which will call for a dramatic £150bn shake-up in the country\’s fiscal system – including a £3,300 tax on new cars and a tripling of fuel duties over the next decade, to be balanced by a cut in income tax and national insurance.
I wonder how they\’ll make their numbers add up?
We know from the Stern Review that the social cost of carbon dioxide emissions is $80 a tonne. That\’s around 11 p on a litre of petrol. Thus the green tax on a litre of petrol should be 11p. (We can add more for congestion, particularate pollution, the costs of building the roads etc, yes, and just to raise revenue, but the carbon element of the tax should indeed be set at the costs level.) As we\’ve already raised the petrol tax by 23 p a litre since 1993 \”to meet our Rio commitments\” then we\’re already there.
There is no \”carbon\” justification for raising fuel duty further.
Total fuel duty is currently somewhere north of 50 p a litre. Their suggestion is that it should rise to £1.50 within a decade. Fuel duty currently raises about £20 billion (that\’s the right order of magnitude at least). Assume that demand will be static (which of course it won\’t be and of course that\’s the point of taxing it so highly) and this tax rise could raise a further £40 billion: which is enough to raise the income tax allowance to £12,000 and so take all minimum wage payers out of the income tax net.
Now, if that\’s what they are to propose that\’s actually something I would support: the benefits to be had by sorting out our entirely vile method of taxing the poor would be worth just about anything we do to petrol prices.
However, this is insane:
including a £3,300 tax on new cars
We of course want people to junk the old gas guzzlers and embrace the newer less thirsty cars: that VW Polo at 70 mpg for the diesel for example. How making it more expensive to get a less consuming car is going to reduce consumption is, umm, difficult to see.