There is a problem with green taxes

The Daily Telegraph revealed earlier this year that government officials have begun private discussions with the motoring industry and drivers’ groups about an overhaul of the VED rules.

The talks come as ministers try to prevent a fall in tax revenues as more motorists choose smaller, cleaner cars that incur a lower rate of duty. Labour has accused the Coalition of planning a “stealth tax” on drivers, effectively punishing them for going green.

As people react to them then the revenue from them goes down. Leading to politicians to consider changing the structure of the taxes so as to maintain revenue: even while people are doing exactly what the tax pushes them to do.

Sadly there isn\’t really a solution to this problem. It\’s inherent in the incentives of politics itself: the desire to gain power over the maximum amount of the economy possible. The same problem will/would bedevil a carbon tax. Making a carbon tax have problems even if it is still the best available solution.

7 thoughts on “There is a problem with green taxes”

  1. At heart, taxes are about two things.

    1. Increasing the revenue available to politicians and bureaucrats, so they can get bigger cars and houses to attract better mates.

    2. Giving mpney from wqorking people to idle people.

    Taxes have fuck all to do with their stated aims.

  2. VED and petrol duty are not really green taxes, they’re a crudely implemented congestion charge, tinted green. If the government believed in green taxes, it would apply the same duty to fuel whatever it’s used for.

  3. Given that the majority of people who criticise your carbon tax idea do so for the very reasons outlined above (ie. it isn’t {or won’t be} driven by considerations of externalities) why do you still promote it. The hydrogen filled airship was a wonderful idea, except for one glaring flaw.

  4. Paul B
    “VED and petrol duty are not really green taxes, they’re a crudely implemented congestion charge, tinted green.”

    Not really on the point of the post, but I don’t follow that. I pay the same VED in central London as Tim’s readers in their various rural backwaters. Ditto me buying petrol to crawl around London (or get out of it). I would have thought the cost of fuel is more of an incentive to get an efficient car if you live out in the sticks. Is it is mildly green and nothing to do with congestion.

    What (very effectively) stops me driving around London much is not the cost of petrol or even the congestion charge, but the actual congestion (and not being able to park).

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