After that, please provide all your explanations for preventing carbon taxes being regressive?
There are good reasons for thinking you are very wrong
So, tell me who is funding you to be so wrong in that case?
One answer is that a bit of regressivity in order to save the planet doesn’t sound so bad. We are, after all, insisting that everyone should travel less, everyone should eat less meat and so on. This will impact more upon those with lower incomes because they start out by doing less of these things.
Another is that the P³ already claims that certain parts of the tax system are regressive. VAT for example. Or employees’ national insurance – it stops at about the income (sorry, falls significantly in rate) that income tax increases. Or NI isn’t paid upon capital incomes, only richer folks have capital incomes, the poorer rely upon labour incomes. Or council tax is regressive as it doesn’t have enough higher bands. All of these are things that the P³ has already told us.
There is no part of the pro-carbon tax argument which insists that it must be used to raise hypothecated revenue. The aim is to change the price structure, not revenue raising. Thus the revenue goes into the general pot – and we can reduce some other revenue raiser to balance it. The general proposal – Nordhaus, Stern, damn near every economist on the planet – is for a revenue neutral carbon tax after all. Hell, if you decide to sting carbon enough it might even be worth setting up a dividend scheme, make that per capita and that’s hugely progressive.
So, if we’ve already got regressive taxes we can institute another one and balance by reducing one of those extant. Add a carbon tax, reduce the rate of VAT. Or pay a dividend. Or reduce the base level of council tax. Or reduce employees’ NI. Actually, Gordon Brown reduce employers’ NI when he brought in the landfill tax – same idea.
All of this is widely explored in the literature and well known.
It’s not that the P³ doesn’t know it either. Here it’s not ignorance driving the screeching, it’s self-interest. Who would fund sustainable cost accounting if we already knew the solution?
Sometimes public choice economics is just too easypeasy.