Experts Predict Green Tax Options

On the BBC today two financial experts from Ernst & Young look at what tax tactics could be used in the forthcoming budget to encourage people to go green.

Until recently environmental taxes have been based on the ‘polluter pays’ principle, although some  critics see it as just another stealth tax. Surprisingly green taxes take around 1% to 1.5% less of total tax now than they did ten years ago. Restoring the balance could provide an extra £5bn to £6n of tax revenues.

The Stern Report has gives the chancellor a good economic argument to back his actions. But it is suggested winning the political argument may be easier if he was prepared
to offer incentives for ‘good’ green behaviour at the same time he
inflicted taxes for ‘bad’ green behaviour.

The experts then suggest how the chancellor chancellor could use the tax system to offer rewards to people for better ‘green’ behaviour? But, most of the 8 recommendations do not actually directly reward people. They propose better use of the tax collected, more information and transparency, and schemes to have the governments own departments lead by example. The only idea proposed that would have a direct and immediate impact on individuals is the "Greater use of lower rates for clearly carbon friendly goods and services could have an immediate impact."

The esperts conclude that "When it comes to the environment the chancellor will
want to demonstrate his commitment to this issue and may decide that
deterrents are more effective than incentives."

Paul Barnett of Ethical Design Lab says. ""The implication for consumers and for business is be prepared for
more green taxes. Businesses especially MUST embrace the issue sooner
rather than later and get clear green strategies in place if they are
not to suffer severe competitive disadvantages."

On the other hand he suggests, "companies that lead the way and are
well prepared will have a distinct advantage over their rivals,
especially if they also translate action into marketing benefits." He ads that companies may also expect that positive and negative taxes to be used to stimulate green innovation in business. Businesses should be already thinking and planning for this."

To read the Full article see the BBC

Article contributed by Ethical Design Lab