Well this is what the public seem to think according to the BBC. 62% of people questioned in a Populus poll said that green taxes were just a revenue-raising measure, and nearly half were against the idea altogether. This is not at all surprising. The public must be so used to stealth taxes after Gordon Brown’s tenure at the treasury that they just see them as a way to raise tax without having to do so directly. Of course they are massively regressive in that they are fixed and therefore hurt the poorest consumers first, but politically it means the Government avoids having to raise the rate of tax up-front. However, even if Green Taxes are implemented honestly to reduce pollution, the public will probably be equally as sceptical as they are about other stealth taxes.
This is all the more reason to ensure that individual Green Taxes are well thought through. They must only be introduced if they encourage consumers to act in another way, and the only way to do this is by making the alternatives cost less. This way the taxes may not be viewed as revenue-raising measures because they encourage alternative consumption that raises less revenue, and in fact could cost the Government more. And, of course, if the Government were seriously concerned about the environment they would spend just as much, if not more, than they tax. For example, while you could increase tax on fuel, what is the alternative for drivers? Well, there isn’t one, they simply pay more. Many families depend on their cars and are probably, if pushed, prepared to pay more to keep them. So what you could do, to take one example, is subsidise car owners to have their engines converted to take LPG fuel. And indeed this is what the Government did, until it stopped doing it. It costs approximately £2,000 to convert car engines to take LPG, and until the Government reversed the policy, there was a 75% grant available for car owners to help pay. The Government argued that not enough people were taking-up the grant and so therefore it wasn’t working. This is nonsense. The real reason was that they hadn’t gone far enough. To receive the grant your car had to be under 5 years old and the conversion could only be carried out by an approved converter. Plus, one could argue the grant was not enough and the fuel wasn’t widely available. But if the Government had made a success out of the policy they might have encouraged car users to opt for conversion.
People will not respond simply to a stick (i.e. increasing tax on fuel), but they will respond to a carrot (i.e. cheap engine conversions). And so, they make their choice. This is true with other clean fuels and clean cars, as well as in other areas of consumption. If the Government want to change people’s behaviour they may need to provide incentives, as well as some well placed taxes, to help nudge them in the right direction. This approach might be viewed less sceptically by the public.
