Environmental Tax Proposals: Analysis and Evaluation

Abstract

This article analyses and evaluates current government proposals for five new environmental taxes or charges: an aggregates tax, a climate change levy, workplace parking levies, road user charging schemes and a pesticides tax. It defines taxes as unrequited payments to general government, charges being, by contrast, payments which are requited. Environmental taxes or charges are those whose base is a physical unit, or a proxy for a physical unit, of something which has a proven negative impact on the environment when used or released. Both environmental taxes and charges are economic instruments for environmental protection and, as such, must satisfy nine basic criteria before they can be said to operate satisfactorily. An aggregates tax is not a worthwhile environmental tax in the light of these criteria. A climate change levy, although worthy, is misguided in a number of important respects, and is also, on the whole, not a worthwhile environmental tax. It is too early to say whether a pesticides tax is worthwhile in these terms. It is unclear whether workplace parking levies are worthwhile environmental taxes, while road user charging schemes are unlikely to be so. The government's environmental tax programme has been damaged by political, rather than strictly environmental, considerations.