And lo the tax proposals came to pass. Amidst all the media bluster about the amendments and the challenge to Ming, no-one really mentioned that the proposals themselves were always going to sail through.
But the whole thing did leave me wondering what the endgame would be. Big ticket flat taxes are surely the way to start, but what do we want or need environmental taxes to turn into?
So allow me now to open a debate; I’ll describe a reasonably comprehensive environmental tax system, then you can tell me why it’s a load of twaddle that would never work. I’ll probably lose, but you’ll have to ask yourself the question, which is probably the more important thing.
The mechanism I would choose is VAT. Yes, it’s regressive, but it is a tax directly levied on behaviour and behaviour is what we are seeking to modify. Moreover, the regressiveness can, at least politically, be tempered by the process.
In my system, we consider all goods and services according to three criteria;
- Delivery – This considers everything that gets the goods or services to the point of sale. Primarily this will be the energy cost of producing and transporting the item on the manufacturer’s and vendor’s part and the resulting environmental impact.
- Utilisation – This considers the environmental impact of using the product as sold. In some cases (e.g. petrol) this will be a direct emissions impact, but it largely refers to waste output and the cost of disposal.
- Social Impact – This considers the cost to society of the use of a particular product. Through this category, things like alcohol and cigarette duty become empirical quantities rather than political footballs.
For each quantity, a points score is assessed, initially on a rather generic basis (for example, Delivery = Production Energy + (Mass x Distance Transported)), and these are added to produce the VATable rating. The government then assigns a percentage value per point to give the rate of tax levied on any particular item.
Once the generic study is completed, companies may then apply for specific certifications where their products are better than the assessed standard; for example, if the average car is 40% recyclable but the car I produce is 80% recyclable, I apply for recertification and the VATable rating of my product goes down.
The result is a VAT system that, far from being flat and arbitrarily regressive, is scientifically assessed and socially, if not academically progressive. It provides a direct financial incentive to consumers to improve their behaviour and to producers to improve their products.
The primary downside, from a liberal perspective, is obvious; the initial assessment and management of the scheme requires an independent agency on an unimaginable scale using an IT system that would make the iSoft debacle look positively puny.
But the question remains; what is the endgame? President Bush loves to tell us that technology is the way to beat global warming. This is a solution where we have the technology; can we rebuild him?