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Carbon Tax is wrong
Read more about: Energy, Green Party 
One of the main policy platforms of the Green Party is the introduction of a carbon tax. The purpose of the carbon tax is that by putting a certain amount of tax on carbon emissions, people and industries will change their attitudes, emit less carbon emissions and invest more heavily in renewable energy sources. Now it sounds great, doesn’t it? But in reality it will do feck all to achieve any of the aims of Carbon Tax and will punish the poorest hardest.
Energy Action is an Irish charity that “addresses the thermal needs of the elderly and needy”. In September 2003, they issued a response to a Department of Finance consultation document on a Carbon Tax. They said:
Low-income households will be the worse effected by the proposals to increase fuel prices to meet Ireland’s Kyoto obligations. As set out in the consultation document, and the two background papers, the Carbon Tax proposals are seriously regressive in terms of their impact. The impact will be largest on the poorest sections of the population—those already spending more of their income on fuel—and those least able to take action to avoid or ameliorate the impact of the increases. Then, to add insult to injury, low-income households will be further punished because VAT will be applied on top of the Carbon Tax.
Now, the reply of the Green party to this is I guess this:
If the proceeds of any carbon tax were guaranteed to be recycled in the form of lower labour and VAT taxes including social welfare increases, then the Irish public would benefit overall.
However Energy Action also rightly point out the flaws in this idea:
…all of these methods represent forms of income transfer that are either an inefficient method of compensation (e.g., a general income transfer through uprating of social welfare rates may not be used by the household on fuel) or a subsidy, or represent a subsidy for inefficient fuel use (e.g., increasing free fuel allowances or subsidising fuel expenditure does not tackle the cause of the problem, that is, poorly insulated dwellings or carbon intensive heating systems).
Further, raising the scale rates within the benefit system would not compensate low-income households that were not reliant on state benefits. They would give poor value for money, and not achieve their purpose.
Also one of the biggest impediments for people to move out of poverty is poverty traps. Where people become dependant on state hand outs and can not chose to take a job or a better job as they will be better off with state benefits rather then taking the better paying job. Introducing a carbon tax and then increasing benefits means that people will not only be financially worse off the poverty trap will come that bit tighter.
But hey, the Green Party electorate are not from low income groups, so the above does not really effect them. But what the general aim of carbon tax, that of reducing the amount of Carbon emissions and encouraging money to be invested in renewables?
The biggest source of carbon emissions, I am guessing, is from cows farting, which Professor Frank Convery claims accounts for 35% of Ireland emissions. Now is any party going to bring in a fart tax? It would give the bifsniff guys a field day. Also if carbon tax was imposed on cows and other farm animals this would be another further regressive tax on the poor.
Well, I am guessing at this but I am pretty sure that the next biggest emission source is from cars. For all the talk of renewables energy there is still no alternative to the internal combustion engine. Hydrogen is very difficult to store and transport and ethanol requires a crazy amount of land. Now I am sure people in favour of carbon tax would say that this would increase research in non-petrol cars. Which may indeed be true but alternatives to the internal combustion engine are very far from being introduced to market and we are unlikely to see alternatives on the road anytime soon. In the mean time inflation would soar.
But what about hybrid cars? You ask and making people to move to public transport. Well we have already seen massive increases in the price of petrol and bigger cars already pay more VRT and we have never had more or bigger cars on the road.I argued before that trying to change attitudes through taxation is not easy as the key is making people think about what they are doing not making them pay more. Introducing a carbon tax will just result in higher prices not new attitudes.
And what of electricity generation? Considering that the government already controls much of the electricity market. The introduction of carbon tax is not going to encourage companies to move to a great extent to alternatives. For this to work it would require a privatised energy market without the ESB in a monopoly position where the alternative suppliers could compete at an even level with the non-alternative suppliers and offer customers a cheaper product. Alas that is not likely to happen any time soon. Anyway, energy security and high prices are incentives enough for the government to move to alternatives.
Sweden introduced a carbon tax that did result in a reduction of emission. A report by Bengt Johansson of the Swedish Environmental Protection Agency did mention that some positives had come of the tax.
The main effect has been the expansion of biomass in the district heating systems. This expansion has in turn led to a development of the technology for biomass extraction in forestry and in the implementation of more efficient heat plants in the district heating system.
As for cutting of emission the report noted:
The evaluation shows, however, that regulations also have had a large effect on the emission reductions. For the measures that are in question, i.e., combustion improvements and exhaust gas treatment on large plants and reductions of the fuel sulphur content, regulations seem to be cost effective measures as well.
Regulations would have a lot greater effect at reducing carbon emissions for a far less price then a carbon tax would. The cost of the carbon tax like most taxes would not only damage the economic well being of the country but also like most taxes hit the poor hardest.
The BBC article isn’t very good. Flatulence, whether bovine, human, or something else, consists of air and methane. The carbon dioxide content of flatulence is only slighly above that of the atmosphere, and largely inconsequential compared to CO2 from other sources (such as the cow’s mouth). Convery’s research is into producing grass varieties that cause the cows to produce less methane, and so fart less.
Still you must admit Farting is funnier then cows mouths
Im not sure bout some of those premises. Tax can be quite effective if the regime is tied quite clearly and publicly (i.e. long term ad campaign) to behavioural factors. Cigarette smoking is an example. Its still prevalant among a minority but its decline.
The issue is that tax regimes of that sore give government a vested interest in maintaining a level of bad behaviour as a revenue source. That source is then legitimised by hte view of the majority that polluting is an immoral and taxable offence.
Regulations would have a lot greater effect at reducing carbon emissions for a far less price then a carbon tax would. The cost of the carbon tax like most taxes would not only damage the economic well being of the country but also like most taxes hit the poor hardest.
I think the greens would agree there but would see the carbon tax as part of a plan to jolt this “carbon guzzling” society out of its ways and onto the sustainable track to growth. I believe regulations would work but the most effective department in the country at carrying out policy is Finance. The tax encure maximum compliance and awareness.
I think the point on energy security is not sufficient. there is no alternative in the transport market, its simply the efficient use of fuel versus new fuels. The efficient use of fuels implies public transport on a national basis which is delivered effectively to supportive users. The tax is intended to be a firing shot in what is likely to be the green war on cars.
I would support it as a measuer which shoehorns sustainability onto the agenda but that support stops once government switches to the above cigarette mentality.
But Cian what do you think has had a greater effect on the fall of smoking rates, the advertising, education, smoking ban (regulation) or tax. One of the most dramatic falls in recent years in smoking rates came about after the smoking ban was introduced. The various increases on excise duty has never showen to my knowledge a dip in the smoking rates in the time after a budget.
Also look at the excise duty increases through out the years on alcohol no sign f alcohol consumption dropping. Also the rise in petrol simulates the rise in petrol caused by a carbon tax. And nothing has come of it.
As for imoral offences . Drinving an SUV in a city can be construded as being imoral yet people pay more for them at that gas pump and at the VRT and we have never had more of them.
I think that if a carbon tax came in people would just say it was another stealth tax.
also your point doesn’t answer my main point that it is the poor that would suffer the most.
also your point doesn’t answer my main point that it is the poor that would suffer the most.
Because i agree that consumption taxes will by nature hurt the poor. My support is notional and contingent on many factors.
I think the cost factor is deterrent in that it contributes a sense of coherency to the policy of diminishing smoking in the society. However it is not sufficient to lead to change, its policy value lies in its effect on behaviour and also that it draws in the Finance dept into the policy-motivate revenue getters and the most effective civil servants. The worry i have is the temptation to use it as a cash cow.