Green taxes need explaining or risk backlash according to study

by Michael Smith

Governments must do a better job of explaining environmental taxes such as charges on driving in cities, aka congestion charges, as are in force in London and are planned for Manchester, or higher electricity bills or risk a public backlash, a recently conducted study shows.

Governments often fail to link green taxes to their goal of curbing energy use or helping a shift to renewable energies, according to Steffen Kallbekken, of the Center for International Climate and Environmental Research in Oslo.

"People do not understand environmental taxes," he said. "There is quite a strong belief that the revenues just disappear into a big black hole."

The problem is that that is not just a belief held erroneously by people, I would say. The truth is that often revenues do just disappear into the proverbial black hole or, as is the case in some countries, with Britain amongst them, it would appear, where revenues gathered in one field are used in another, such as the road taxed that are not, it would appear, been used to improve transport infrastructure.

Kallbekken studied how people view green taxes by reviewing existing literature on European tax systems and looking at the responses given by 160 people to questionnaires in Switzerland.

"If politicians don't provide better information about how these taxes work, it might not be politically feasible to implement them," said Mr. Kallbekken.

Green taxation is likely to rise in coming years to help avert ever more heatwaves, droughts and rising seas predicted by the U.N. Climate Panel. About 190 governments meet in Poznan, Poland, from December 1-12 for talks on a new U.N. climate treaty.

Many people dislike tax of any sort but environmental taxes are meant to help change behavior – rather than merely raise revenues for general government purposes ranging from hospitals to paying pensions, Kallbekken said.

Many governments, however, yet again do exactly as feared by the people, namely using the the raising of environmental taxes as just another means to get money into the coffers of the government without using those revenues thus raised to actually do something for the environment, such as, for instance, providing nationwide cycle paths that are safe to use.

One example of how environmental taxes can win public support was a well-explained trial period for a congestion charge to cut traffic in Stockholm, he said.

During the trial, traffic was reduced by 22 percent, rush hour travel times were almost a third shorter, accident rates fell and emissions of greenhouse gases dropped 10 to 14 percent.

"The congestion tax was very controversial before the trial period," Kallbekken said. "But the trial gave people a chance to experience the benefits." Swedish authorities also helped by earmarking revenues for road improvements and public transport.

But earmarking revenues was often hard in practice.

In Britain in 2000, he said the government abandoned a badly thought out fuel tax after protests from truck drivers. The tax system built in steady increases irrespective of underlying oil prices.

In questionnaires, he said many people failed to understand how environmental taxes would benefit society. His report looked at taxes that affect individuals, rather than taxes on industry or measures such as carbon trading.

"The most important taxes would be fuel taxes and energy taxes on your gas and electricity bills," he said. These could help curb energy use but take a lot of education to explain and government, we have to admit, is not very good in explaining such things, especially if they are not really honest, which many of them are not.

Mr. Kallbekken said that U.S. President-elect Barack Obama would face even bigger problems in seeking green taxes than in the governments do in Europe.

"In America people have an even stronger aversion to taxes than people have in Europe," he said. Taxes on cars, for instance raising the costs of gas guzzling vehicles while promoting smaller cars, were often unpopular and not very effective in terms of curbing carbon dioxide emissions.

One way to introduce environmental taxes in the United States would be to cut income taxes, for instance, while raising green taxes, he said.

The same could and should, maybe, also suggested for other countries, then those that live and environmentally friendly lifestyle with doing their bit as to recycling and reducing energy and water usage getting some benefit that way. But, alas, all the majority of governments want to use those environmental taxes for is another way of raising money for the depleted state coffers.

This is also the very reason why, in the UK for instance, they rather penalize people for not recycling than to financially reward those that do. But that just simply would not bring in any money in for the Treasury hence it will not be done. I mean neither the reducing of income tax, for instance, not the paying people to recycle.

© M Smith (Veshengro), November 2008