Well, yes Irwin. Quite.
All of this makes it even more urgent that attention be paid to green policies, as these will not only reduce the emission of greenhouse gasses, but dependence on carbon-based fuels. George Osborne has been trying to do just that by pressing for a tax on carbon or on CO2 emissions. "There are very strong arguments for shifting the burden of taxation away from work and investment and towards pollution," says the shadow chancellor in what might be a precursor of a new Tory slogan: "pay when you burn, not when you earn".
Payroll taxes make it expensive for businesses to create jobs; income taxes discourage workers from taking jobs, especially when an overly generous benefits system is available. Government subsidies of "winners" such as renewable and nuclear energy are costly and must be paid for by job-destroying taxes, or still more borrowing. And they don\’t create sustainable jobs.
There is a simple rule that should guide policy – tax bads, not goods. Pollution is bad, jobs are good. CO2 emissions are especially bad. It would be imprudent to ignore the possibility that they might be contributing to global warming; we have seen how countries in which God has seen fit to locate oil and gas can use them as a foreign policy weapon.
So, tax those emissions or the use of fuels that produce them.
Great. So what level should these taxes be set at? How about equal to hte damage that such emissions do? That\’s the logic of Pigou taxation after all. And what is that level? Around $85 a tonne CO2 according to Stern. And what are emissions? 500 million tonnes a year from the UK. Some $40 billion a year then. OR, when we run it through the PPP exchange rate, take account of time etc, the Defra idea of about £15 billion a year.
How much do we already pay in such emissions taxation? Why, around and about (some say much more but that\’s being a little over the top) £15 billion a year. So, good, problem solved.