Should petrol be cheaper?
by Simon Handby in Your car on 14.03.08
Yesterday we wrote about the Budget, in which chancellor Alistair Darling delayed a 2p tax hike on fuel but announced a hefty new tax for the largest, most polluting cars. Higher taxes aren’t great news for the driver, but they’re good for the environment, right?
Well, some people aren’t so sure. Writing on technology news site The Register, Tim Worstall, fellow of economic thinktank the Adam Smith Institute argued that the chancellor shouldn’t be adding to the tax burden on the motorist at all - instead, he should be knocking 12p off each litre of fuel.
That’s certainly at odds with environmental charities, who were dismayed at the chancellor’s ‘dropping of the ball’ on climate change, so how did Worstall arrive at the figure?
According to the Register article, the government-commissioned Stern Review on climate change found that there was a ‘correct level’ of tax on any polluting activity, which was equivalent to the cost of dealing with the climate change that it caused. Apparently, the taxation on fuel is already 12p per litre higher than this level.
Of course, one problem with using this as an argument for lower taxes is that it assumes that Sir Nicholas Stern’s sums are right. We’re not suggesting they aren’t, but there’s still widespread disagreement on the scale, implications and significance of climate change - it could cost much less, or much more, than we currently expect.
Reducing the tax on fuel to its ‘correct level’ would surely encourage us to use more of it. And unless taxes were raised to the ‘correct level’ on under-taxed sources of CO2, any increase in the CO2 from our cars wouldn’t be offset.
IMAGES by Flickr users skalas2 and OhioProgressive
Add your comment