Green in judgment? Oliver Penrose on investment over tax

‘What we need is not ingenious taxation proposals but a programme of investment.’

The 30 July issue of the Friend contained a report that Milton Keynes Council, encouraged by local Quakers, had voted in favour of a ‘Carbon Fee and Dividend’ proposal. In this scheme (also known as ‘Climate Income’), a tax is levied on the sale of fossil fuels, and the revenue of this tax is distributed over the entire population as a monthly income or regular payment. The idea that the climate crisis can be alleviated simply by transferring money from greedy fossil-fuel producers to needy low-income families sounds too good to be true, and I will argue that it is indeed too good to be true.

If this proposal were acted upon, the net effect would be to transfer money from people who use more fossil fuel than the national average to those who use less. How will these payments influence emissions? People who are using more than the average are probably better off than the average; to minimize their tax they may indeed try to use less fossil fuel. Or they may absorb the extra cost by other means. Meanwhile, those who are using less than the average amount are probably worse off than the average; presumably they will spend their ‘climate income’ handout on whatever they need the most, and this may be extra fuel to make their homes warmer, or petrol to drive to work instead of cycling in the rain. There is no guarantee that the scheme would reduce fossil fuel consumption, and it might even have the opposite effect. No, what we need urgently is not taxation proposals which muddle two distinct objectives – reducing emissions, and redistributing wealth – but a programme of investment, to replace fossil-fuel energy by renewable energy.

At present we in the UK use fossil-fuel energy at an average rate of about 1.8 kilowatts per person. So to maintain living standards without using fossil fuel, we need new non-fossil energy sources to match. Such investments are not cheap. For example, enough wind turbines to provide energy at an average rate of 1.8 kilowatts would require an investment of something like £4,000 per person, even if we disregard other necessary investments such as charging points for electric cars. This is more than ten per cent of the UK average annual income per person. A very significant investment, paid for out of taxes, will be necessary. Presumably the tax implications are the reason why governments like ours are so half-hearted in their response to the climate emergency. I would urge Quakers, in accordance with the testimonies of Truth, Integrity and Investment and to look for ways of building support for it.

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Comments

Something went wrong with the last sentence. It should read “I would urge Quakers, in accordance with the testimonies of truth and integrity and of sustainability, to acknowledge the need for this kind of investment and to look for ways of building up support for it.”

Oliver

By O.Pnrose on 2nd September 2021 - 12:52

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