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March 11, 2007

George Osbourne: Moron

Has George Osbourne been at the snuff again? Cameron too? What is this drivel they're announcing?

Harsh new taxes on air travel, including a strict personal flight "allowance", will be unveiled by the Conservatives tomorrow as part of a plan that would penalise business travellers, holidaymakers and the tourist industry.

The proposals, to be disclosed by George Osborne, the shadow chancellor, include levying VAT or fuel duty on domestic flights for the first time as part of a radical plan to tackle global warming.

The Conservatives will also suggest - most controversially of all - rationing individuals to as little as a single short-haul flight each year; any further journeys would attract progressively higher taxes, a leaked document entitled Greener Skies suggests.

Now, I'll admit that there's one sensible thing here, that any taxation should be revenue neutral. Fine. However, taxing dirty engines? How, precisely, is that going to be done?

But much, much, more importantly, they don't actually seem to understand what Gordon Brown has already done. The taxation of flights is now correct and doesn't need to be changed.

We've just had this great big report, remember? The Stern Review? The one that we really do hope that everyone has read and digested? Good, now we do indeed have arguments with the results of it, discount rates, the use of A2, etc etc. But, let us agree, for the sake of our argument here, that it really is the bee's knees, unflawed and perfect in every way.

Excellent, CO2 imposes costs of $85 per tonne of emissions. We should impose Pigouvian taxes to make sure that people pay the social costs of their actions. Now, note that we do not then go on to say that planes should be taxed out of the skies. We are saying that once people are paying the social costs, then we let the market decide how much of those costs we will impose.

Another way of looking at this is that we have put a price on drowning Bangladesh, boiling the polar bears and giving Reno beachfront property. That $85 per tonne of emissions. As long as people are indeed paying $85 (an extraordinarily high figure BTW, but we have already said that we'll accept Stern as being correct) then they can go ahead and pollute. For we will be getting the socially optimal amount of pollution, the correct balance between the needs and desires of those now and of those in the future.

That's actually what Pigouvian taxation means, the very purpose of the whole idea.

So, big report, telling us what to do. So why don't we do it? $85 per tonne CO2? My wife is just about to take a flight from Faro to Luton. Emissions will be about 0.25 of a tonne by one CO2 calculator. On her flight there is a £10 tax courtesy of Gordon Brown, called Air Passenger Duty. That is, err, a tax of roughly $85 per tonne of CO2 emissions.

You see, we are already taxing flights correctly. No more needs to be done, indeed no more should be done. It's settled, we're doing the right thing already, this problem is solved.

So what are Osbourne and Cameron dribbling on about? We have two possibilities: one, they haven't read the report and two, they've read it but don't understand it.

Neither really creates great trust in their ability to do the right thing on green taxation, does it?

Pass the snuff would you? I want to try and replicate their state of mind to see if this proposal looks any better that way.

March 11, 2007 in Climate Change | Permalink

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Comments

Tim,

I don't know whether or not either of them have been at the happy dust - however, for such a proposal to be announced so soon after Channel 4 and Martin Durkin have ripped out and eaten the false god 'of man-made climate change's intellectual heart shows a staggering degree of political ineptitude on both Osborne and Cameron's part.

It used to be said that those who wished equity must come before it with clean hands. Maybe Gaia should start demanding her supplicants display clean nostrils.

Posted by: Martin | Mar 11, 2007 10:04:05 AM

The Conservatives will also suggest - most controversially of all - rationing individuals to as little as a single short-haul flight each year; any further journeys would attract progressively higher taxes, a leaked document entitled Greener Skies suggests.

Bang goes Scotland's financial services industry.

Posted by: David Farrer | Mar 11, 2007 10:43:59 AM

Just watch international businesses fly... one-way.

Posted by: Kit | Mar 11, 2007 12:08:22 PM

It'll be great news for the chunnel, people will let the train take the strain to Paris and then pick up a flight from there. The French will happily accept the new business. I'm so glad we are currently living outside the UK. despite being a life long tory voter, if the boy Cameron gets in we'll be staying where we are. What a tosser.

Posted by: DocBud | Mar 11, 2007 3:04:13 PM

Hmmn, domestic flights whacked for tax (VAT, duty on fuel). Watch all those airlines reschedule flights from London to Edinburgh.. via Amsterdam. And I bet they refuel in Amsterdam and turnaround in Edinburgh and London without re-fueling.

Extra tax raised: zero. CO2 emissions: increased. Job done: no.

Ah, the law of unintended consequences. You'd have thought that the New Conservatives would have watched and learned what the daft morons in New Labour have been doing. Apparently not.

Posted by: Kay Tie | Mar 11, 2007 9:15:33 PM