And Ritchie bombs out again!

Richard Murphy @RichardJMurphy
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This is a bad autumn statement for carbon usage: air passenger duty down and fuel duty frozen #as2014
2:12 PM – 3 Dec 2014

Sigh.

Carbon taxes are Pigou Taxes. This means that there’s a correct rate for them. And the UK rates for these two are already too high. They’re well over the $80 per tonne CO2-e of the Stern Review.

21 thoughts on “And Ritchie bombs out again!”

  1. Also, on what planet is a freeze on fuel duty a reduction? I know the state are under the impression that they’re giving you a gift every time they don’t raise a tax, but it pisses me off that not only Murphy but the entire media mindlessly repeat this shit. No, a fuel duty freeze is not a “gift” to drivers.

    My next-door-neighbour didn’t give me a thousand pounds yesterday. Where the hell am I going to find that kind of money?

  2. APD helps the protect the environment by encouraging me to take a completely unnecessary flight to Paris to then catch a flight to São Paulo, idiots!

  3. Bloke back in Germany

    But the Pigou money all gets spent on ministerial Jaguars and civil service first-class fact-finding missions. It thus neither reduces carbon emission or compensates those affected by carbon emission. Just moves carbon emission from tax payers who’ve earned it to ministers and civil servants who haven’t.

  4. Even if you can correctly determine a cost for CO2 emissions then CO2 emissions won’t necessarily be taxed at that rate. Some activities will be taxed higher and some will be taxed lower according to practical and political considerations.

  5. @S2 “My next-door-neighbour didn’t give me a thousand pounds yesterday. Where the hell am I going to find that kind of money?”

    Ha that made me chuckle!

  6. I’m afraid, on this one, you’re a bit wide of the mark, Tim.

    Carbon taxes are Pigou Taxes

    They can be Pigou Taxes, but that doesn’t mean that they inherently are Pigou Taxes. Your statement is a straw man. It’s a bit like saying that Income Tax is a Pigou Tax and therefore the correct level is zero. Zero may be the right rate, but it doesn’t follow as a consequence of that argument.

    And the UK rates for these two are already too high.

    Maybe if you are only looking at the Carbon element, but Fuel Duty also prices in other externalities, such as road space.

  7. Ritchie should blame those evil Saudis / Libyans / Iraqis / Americans for pumping too much and pushing down the global oil price. In the UK, unleaded has fallen from 131.6p/litre in July to 122.9p/litre in November (source: AA). That drop is directly caused by the crash in global oil prices.
    No doubt these lower prices will lead to more consumption, more carbon burning, and more CO₂ emissions. If Ritchie wants someone to blame for the falling price, it has to be the producers, not the government.

  8. It’s rather a criticism of the Autumn statement that Murphy’s main criticism was on APD and Fuel Duty- the man is the incarnation of pure evil – if this is all you are doing to annoy him, that may explain why UKIP is flying so high….

  9. A Pigou tax is one applied to a market activity that is generating negative externalities.

    Sorry Tim, you are still assuming that CO2 production generates some sort of negative externality. You cannot call a tax Pigovian until you can offer proof, or at least some cogent evidence, of the negative externality.

    And you got nothing, nichts, zero, de nada, rien, niente, semmi, nic and fuck-all. The AGW hoax looks shakier every day. The AGW hoaxers cannot even prove that climate warming would be bad, much less that it is happening. Indeed, from my frozen-ass home in Calgary, Canada, I am entirely in favour of climate warming and plenty of it.

    So it ain’t no Pigou tax.

    But, even so, Murphy delenda est.

  10. bloke (not) in spain

    “those evil Saudis / Libyans / Iraqis / Americans for pumping too much and pushing down the global oil price.”

    My thesis on Pigou taxation a while back. Where more than one of the factors is variable , it won’t achieve what’s intended.
    In this case, increasing the pump price is countered by the producers increasing production to encourage consumption & maintain oil revenues. The oil price is variable because the marginal cost of pumping & refining more oil is low.
    The net result is likely to be an increase in carbon emissions.

  11. Squander Two makes a pertinent point. The mindless media (informed by the mindless Murphy) have bought into this idea that a tax reduction is a ‘giveaway’. Taking less off me is not giving me anything.

    If I threaten to chop off both of Murphy’s legs then decide to only cut off one, I have not given him a leg.

  12. “APD helps the protect the environment by encouraging me to take a completely unnecessary flight to Paris to then catch a flight to São Paulo, idiots!”

    It’s usually even cheaper if you fly back to London from Paris before embarking on the long-haul segment. However, the total saving is much more than the amount of APD – which means this is mainly a commercial rather than tax incentive to take indirect flights.

  13. Bloke in Costa Rica

    b(n)is: q.v. fuel efficiency standards and the Jevons paradox. It’s yet another reason why buggering about with the market using taxes and tariffs is so hard: the second and higher-order effects might be in the opposite direction to and possibly bigger than the first-order effects. And while I’m sure Lord Stern could give a plausible defence of every assumption he made in coming up with whatever number he did for the negative externality of CO2 emission, it doesn’t take away from the fact that said number is a) begging the question that there is, in fact, a negative externality at all and b) subjective to such an extent that the idea of basing policy is on it is entirely vitiated.

  14. Stern is necessarily wrong because he gave a single figure, and it should be a supply curve.

    If humanity emits one ton of CO2-e, then we know what the externality of that is – it’s zero, which is why Roman coal burning didn’t cause any climate change.

    If humanity emits 10 trillion tons of CO2-e then the externality is infinite because that raises the CO2 partial pressure in the atmosphere high enough to be fatal to humans.

    Like anything else, there’s a cost/supply curve, which isn’t flat. We need to know where we are on that curve to set the appropriate price. Stern doesn’t make a proper attempt at a supply curve, making a Pigou tax rather more complex.

  15. Bloke in Costa Rica

    Richard Gadsden: it’s likely the curve isn’t even monotonic. If, for example, crop yields or forest cover are increased with higher CO2 concentrations then the externality at some (non-zero) point might well be positive. And this would be a true externality, separate from the utility derived from the activity which generated the CO2 in the first place.

  16. Can you show us your working on this Tim? Of course there’s no definitive calculation, but waving a hand at it I reckon APD is somewhere roughly around the Stern price.

  17. Andrew,

    > Squander Two makes a pertinent point. The mindless media (informed by the mindless Murphy) have bought into this idea that a tax reduction is a ‘giveaway’. Taking less off me is not giving me anything.

    Well, thank you very much. But it’s much worse than that. The Chancellor doesn’t need to reduce a tax for it to qualify as a “gift”; he just needs to not increase it.

  18. Paul,

    > They can be Pigou Taxes, but that doesn’t mean that they inherently are Pigou Taxes. Your statement is a straw man. It’s a bit like saying that Income Tax is a Pigou Tax and therefore the correct level is zero.

    Tim was explicitly responding to Murphy’s point about carbon dioxide emissions. Murphy was talking about the Pigovian aspect of the taxes.

    > Maybe if you are only looking at the Carbon element, but Fuel Duty also prices in other externalities, such as road space.

    Are you saying that the UK’s crowded roads are a bigger negative externality than climate change, according to the Treasury’s assumptions? That seems unlikely.

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