I am impressed by the courage of those who have taken direct action in the cause of the Extinction Rebellion. They have gone beyond talk, as the crisis facing our world requires.
But, that said, I have never been inclined to take direct action: it’s just not the way I want to change the world. I am not saying it’s wrong: far from it in fact. I think it works. But I have always felt that there have been other things for me to do. And what that has meant in the current situation is that I have had to ask myself what I might do. My answer is to suggest that we need to talk about Tax to Save The Environment (TASTE).
I have long argued that the primary purpose of tax is not to raise revenue. I wrote a whole book – The Joy of Tax – on that theme. I unashamedly recommend reading it. In it I suggested that there were six reasons for tax:
Reclaiming the money the government has spent into the economy.
Ratifying the value of money.
Reorganising the economy.
Redistributing income and wealth within the economy.
Repricing goods and services.
Raising representation in a democracy.
These are explained in more detail here.
My argument when suggesting Tax to Save The Environment falls into categories 3, 4 and 5, although with a focus on the last, and definite implications for the other groups. I stress: the aim is not to raise money. It is to use tax to change the way out society works.
And that is what is required now: a whole change to the way our society works. Since in my opinion tax is one of the most powerful tools that we have to change the way that society works, for better or worse, my contribution will be to suggest ways that tax can deliver change for the better to help save our plant. That’s what TASTE will be all about.
An example of which is:
It’s sometimes thought that tax is complex. And sometimes it is. And that’s why many people misunderstand a lot about taxation. But it does not always need to be so.
It’s my suggestion that we need to use Tax to Save the Environment (TASTE). Let me start with a simple example of something we could do now.
We now know that there is a massive problem with methane created by cattle, sheep and (to a somewhat lesser degree) goats. There is a way to address this issue in the UK. We could put VAT on all food the products that are created from them. We can do this now. VAT on food is allowed under EU law. And it would work: it would shift pricing and so reorientate people towards other products, of which there are many that are available.
I know this would be controversial: I am aware that the big problem would be around milk. The rate of tax on milk might then be open to discussion. On everything else standard rate VAT should be applied now, in my opinion.
And to ensure hardship does not result revenue raised must be matched by the allocation of additional funds to benefits.
This is simple, possible, and achievable now.
It’s the first Tax to Save The Environment. There will be more.
Actual economists have thought through this very problem. Last year’s Nobel Laureate, William Nordhaus, for example. Nick Stern in his review. In fact, damn near every economist who has considered the matter. And the vast majority of other economists agree with them. Assume that the science is right the answer is a carbon tax. What is Ritchie suggesting? Effectively, a carbon tax.
What has Ritchie said in the past?
And carbon pricing does not work. Marco Fante explains why here. The essence is simple though: renewables are cheap enough to ensure that carbon pricing is itself priced out of the market.
So the economists – or rather, the neoliberal economists that the Economist thinks to be the holders of that tile – have lost.
Apparently a carbon tax invented by Ritchie works and a carbon tax considered by every other economist does not. That’s impressive, even by the standards of the Senior Lecturer.
Who knows, maybe it’s just that he’s so damn ignorant he doesn’t know that implicit in all carbon tax proposals is that it’s levied on CO2-e, not actually upon carbon?