Friday, January 22, 2010

Can green taxes pay for the marriage allowance?

Guido has a post up about the Conservative Married tax allowance and how it will be paid for. His belief (or maybe his sources tell him ?) is that it will be funded by green taxes on motorists.

I personally have a big issue with green taxes being used to fund spending commitments. The purpose of green taxes is supposed to be to change the behavior of individuals, they are supposed to put people off doing something, in this case driving a big fuel guzzling CO2 creating car.

There’s a problem with them though, if they work, and they change the behaviour of an individual, then the green tax revenue will actually fall. For example taken to an extreme if green motoring taxes made everyone change to driving a low emission hybrid and there were no “un-green” cars on teh road then there would be no tax revenue either.

Therefore if you’re using green taxes to fund a spending commitment you’re basically admitting that you either:
a) Don’t understand what they’re supposed to do; or
b) Don’t think there’s any chance that they’ll work.

In most cases I think it’s b) and that means that it’s no longer a green tax it’s just a tax.

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