TalkClimateChange

Much ado has been made about the UK’s latest budget presented by Chancellor of the Exchequer Alistair Darling last week.

Green groups universally panned Darling for failing to take a hard line on environmental issues, and particularly for failing to implement a 2 pence tax increase on petrol.

“This was billed as the greenest budget ever. But we didn’t get anything like what was necessary,” said Tony Juniper of Friends of the Earth, whilst John Sauven of Greenpeace accused Darling of “dropping the ball on climate change”.

However, polluters still took a hit, with road tax for newly purchased SUVs and sports cars increasing more than twofold to £950 ($1,928), while some family cars will also be hit with a first-year charge of £750 ($1,522).

So is all this too much, not enough, good, or bad?

An analysis of environmental taxes among selected OECD countries undertaken by The Economist reveals an interesting picture - not least that in many countries (and particularly Britain) green taxes have fallen since 1996, despite governments appearing to be increasingly committed to the environment.

But what is more important, but less clear (both from analysis of the numbers and  government of policies) is exactly how environmental taxes are expected to make a difference to behaviour. The city banker who has just picked up a £150,000 bonus cheque is unlikely to be put off buying a Porsche by a £950 tax. At the other end of the scale, the housewife being hit by a £50 charge to fill up her Peugeot is unlikely to take the non existent bus service to do the shopping.

Tax increases tend to raise the pain level, but have little effect on behavioural change. Using smoking as an example, many nations have progressively increased duty on cigarettes over the years, with little impact on the overall number of smokers. What has reduced the number of smokers significantly is the change in public attitude and social acceptance level of smoking. Likewise, it is public attitude which will ultimately provide the solution to climate change.

We should remember that taxes are not the only method of reducing emissions.  We are far more likely to be successful in de-carbonising our economy if we can instead focus on incentivising smart alternatives and encouraging behavioural change and collective social responsibility. Sadly, many green campaigners and politicians are less focused on these longer term objectives and more focused on short term wins in the form of tax increases and publicity stunts.

Back to my question: is all this too much, not enough, good, or bad? It’s neither - taxes are good and bad, but it is attitude and behaviour which will rule.