THESE GREEN TAXES ARE THROTTLING THE BRITISH ECONOMY *
By Matthew Sinclair
ALWAYS beware politicians who hit upon a cover story for higher taxes. They’ll seize it with gusto.
In 1993 the then chancellor Ken Clarke was the first to use climate change as an excuse to take your money – he invented something called the fuel duty escalator.
Since then we have had three more chancellors but no change in the final result. Families are still getting hit with ever-higher taxes on everything from driving to work to lighting and heating their homes and even taking hard-earned holidays.
Green taxes have become a con that British families just can’t afford with so many other pressures on their finances. The biggest green tax is still fuel duty which raised £27billion in 2010.
With VAT as well on both the fuel and the fuel duty, tax is about 60 per cent of the price at the pump – one of the highest ratios in the world.
Motorists also pay nearly £6billion in road tax. Add up all the domestic green taxes and they raise £39.3billion. If we assume it is fair enough for motorists to pay for building and maintaining roads that leaves £30.1billion of excess revenue.
Those additional taxes – on top of all the income tax and VAT we pay – are supposed to be justified by the contribution greenhouse gases make to global warming.
But even using a high official estimate of the environmental benefit of cutting a tonne of greenhouse gases, Britain’s collective carbon footprint of 582million tonnes causes harm worth around £16.9billion.
That means green taxes are excessive by a massive £13.2billion, equivalent to £500 for every family in Britain.
IF YOU want to get away from it all don’t think you can escape the taxman. For a family of four air passenger duty costs £48 for flights to Europe, £240 for the United States and £340 for Australia.
Research at the Department for Transport found the tax was excessive after Gordon Brown doubled it in 2007. But next year, after a freeze at the last Budget, the Government plans another big rise.
The great environmental ripoff also encompasses regulations that drive up electricity bills in order to fund wind turbines and solar panels or curb industrial greenhouse gas emissions.
Those regulations are costing a fortune, getting a lot more expensive and you might not even have heard of them. They are the stealthiest of stealth taxes.
The European Union emissions trading scheme (ETS) requires installations such as power plants and factories to hold permits for the carbon dioxide they emit. They cost £1.9billion in 2010 – much of which will have been passed on to consumers in higher bills.
The renewables obligation requires energy companies to source a certain share of electricity from wind turbines, solar panels and other renewables.
As they are more expensive than coal and gas it means higher prices. It cost £1.1billion in 2009-10 and is rising.
Over this decade analysts at Citigroup have found that Britain needs to invest more than Germany, France and Spain put together to meet environmental targets and that paying for this investment will mean dual fuel bills rising more than 50 per cent above inflation.
Where businesses are hit by green taxes they’ll either pass it on in higher prices for all kinds of manufactured goods or workers will pay the price in lower wages. Energy intensive industries such as steel, aluminium and chemicals employ hundreds of thousands directly and are vital parts of the supply chains for industries employing many more.
Those workers won’t stand a chance if they have to compete with rivals elsewhere in the world in countries where politicians don’t drive up energy prices.
And the much-hyped green agenda of the political class is an exercise in futility. Even if we give up the benefits of cheap fossil fuels here, major emitters in the developing world won’t follow suit.
All this is hitting families when there are many other burdens on finances. A weak global economy and high inflation are leaving people worse off.
Many of the planned spending cuts will put unavoidable pressure on family budgets. Adding to these problems by voluntarily causing higher energy costs is not just political madness but will create real hardship.
The poor and elderly will be particularly hard hit as they spend a bigger share of their money on fuel. David Cameron said he wouldn’t balance the Budget on the backs of the poorest people in the world but he is making some of the poorest people in Britain pay for a climate policy that will not save the planet.