Spegasaur has been having an interesting discussion about environmental taxes; basically "Should an environmental tax discourage behaviour, or should it pay for behaviour?"
As far as I see it, as long as an environmental tax does one of the 2, it is doing its job - the problem is when it does neither. Ideally it should do both - that is, it should discourage certain unenvironmental behaviour by some people, and the revenues from those that continue to indulge should be ring-fenced into things that cancel the behaviour. What should not happen is that a 'nominal' environmental tax is chucked on something, not in proportion to the environmental damage, and the revenues simply added to the Chancellors coffers.
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Well, having looked at the comments, I think I disagree. Taxes should certainly pay for damage caused - and, just to prove this is purely in the realms of (fantasy) theory, ring-fenced and used only for that damage. But this is, typically, lower than a taxation aimed at discouragement (the article which started me thinking about it is here). To put tax at a level that discourages people from something, is to say that such an act is undesirable, immoral even, above and beyond any costs occurred – and, perhaps, that the additional taxation causes enough ‘good’ to be done to offset the badness of the action.
I would argue that, for both moral and practical reasons, such an argument is without merit. Firstly, if, as a society, we agree that many flights are unnecessary and can be dispensed with, many airlines would go bust; the number of flights happening would spontaeneously decrease, without any governmental action. The point that this hasn’t happened suggests that people - society - does not, in general, see a moral problem here. Given that they are paying for the costs of their actions, what further case for action can there be?
Secondly, economic theory suggests that putting excessive – that is, above cost – taxation on a product or service leads to less-than-optimum usage of that resource. The theory is dull and here.
Anyway. My ha’penny worth.
-Stuart
PS Why does blogger not accept strike tags? Grrr.
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