September 13, 2007
Someone's been letting the teenagers suggest policy again.
Motorists who buy environmentally unfriendly "gas guzzling" cars would be hit by a new batch of green "supertaxes" that would add thousands of pounds to the final bill under plans to be announced by David Cameron's advisers.
What is it that we're actually worried about here? Emissions, isn't it? Great. So, we should be taxing emissions. No, not the potential to emit...we're entirely indifferent to a gas guzzler doing 5 k miles a year as against a petrol sipper with a tenth of the emissions per mile doing 50 k miles per year. Taxing the actual emissions is really very tough indeed but we've got a good proxy: petrol. More petrol used, more emissions, less petrol used, fewer.
Good, so we should be taxing petrol, not cars.
We can go further and ask what that level of taxation should be. As the Stern Review tells us, $85 per tonne CO2. That's around 10 pence per litre of petrol. Current fuel duty is of the order of 50 pence per litre.
My, my. Looks as if we shouldn't be taxing petrol any more than we already do. Perhaps, to get to the socially optimal outcome, less than we do already.
So, when do the adults get to start making policy suggestions?
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Good point Tim.
However, that well known teenager, Gordon Brown, has already implemented what they're advocating.
Cars with larger engines pay more road tax (irrespective of how much they're used) and company car benefit taxation is now based on the CO2/mile emissions of the car and is in no way related to the number of miles and hence the actual emissions. Indeed, once you have a fuel-paid company car, the current situation actually incentivises you to use it in preference to any other form of transport as the marginal cost of using it to the individual is precisely zero (and you will be inclined to travel more because it costs you nothing).
Typical Brown - both complicated and stupid at the same time.
Posted by: HJHJ | Sep 13, 2007 8:57:30 AM
Another ill-conceived populist policy announcement. What worries me now is that the Tories do get voted in on the back of such twaddle, then we as a country really have lost the ability to think rationally and pretty much deserve what we get...
Posted by: Ingram | Sep 13, 2007 9:04:18 AM
We should, arguably, be taxing the energy intensive manufacture of highly toxic and hard to dispose of materials such as those found in rechargable batteries. Of course doing so would impact the Prius owners but it would be justified based on their "carbon footprint"
Posted by: Francis | Sep 13, 2007 9:21:36 AM