Green taxes don’t have to hurt the yellow jackets

Most of the media, however, didn’t seem that interested. Green campaigner and journalist George Monbiot tweeted his dismay that BBC had given “far more coverage to French protests for cheaper fuel than to the massive and remarkable #ExtinctionRebellion protest in our own country”. He condemned the editorial decision as “shameful”.

Subsequent developments may appear to vindicate the BBC’s judgement call, but that, of course, depends on one’s perspective.

If, by the end of the century, our children and grandchildren are living with three, four or more degrees of global warming then the only question they’ll be addressing to our gravestones is why we didn’t do more to avert disaster. The issues that made our headlines, excited our passions and swung our votes will seem irrelevant.

But that’s the future and this is now. Any path to climate stability has to be reconciled with the political realities of the present. Any failure to do so allows environmentalism to be painted as the exclusive concern of those with the luxury of looking beyond the immediate challenges of everyday life.

Consider the following from Jonathan Miller in the Spectator:

“As the yellow wave roils France, Macron is a diminished figure after a crunching fall to earth… Instead of the confident leader, lecturing and preening on the global stage, he is barricaded in his palace, a sort of latter-day Marie Antoinette. French people can’t afford diesel? Let them buy Teslas. Others might compare him to Nero, fiddling with emission targets while Paris burns…”

If the environmental cause becomes mired in this kind of narrative, then it will fail. Miller does acknowledge that the French uprising is about much more than diesel taxes – it is a rebellion against the elites not the environment. And yet Macron’s policy (on which he’s now u-turned) is an object lesson in how not to use taxation as a weapon against climate change.

Fuel duty is a blunt instrument whose blows fall heaviest on those who have no choice but to use their cars and vans to live their lives and make a living. Progressive taxation is all about the ability to pay, but upping duties on fuel is the precise opposite – a tax on the inability not to pay.

One can use the proceeds to subsidise public transport, but, inevitably, this is to the primary benefit of city centres, not the ‘peri-urban’ and rural strongholds of the gilets jaunes. Similarly, using the proceeds to help the poor, while a laudable objective in itself, excludes those who strive, without security, to subsist on their own efforts alone. Geographically and socially, there couldn’t be a better way of provoking France’s flyover country.

And it’s not just the financial pain, but the implication of guilt. Who’s to blame for climate change? You are, white van man! You and your filthy polluting diesel vehicle (that we recently encouraged you to buy as part of a Europe-wide industrial policy that the Germans wanted).

Is there a better way forward? Yes, says Leyland Cecco, also in the Guardian. He argues that the Canadian province of British Columbia provides us with a model of good green taxation – a revenue neutral carbon tax, introduced in 2008:

“By design, the British Columbia plan was simple: it slapped a tax on any fossil fuels used for heating, electricity and transportation. Each person and business was expected to shoulder the burden of pricing pollution; no loopholes, no exemptions.”

Though this did push up prices (“most noticeably at the gas pump”), there was an all-important sweetener :

“…the critical selling point of the plan – the tax’s revenue neutral design – was unprecedented. With a revenue-neutral tax, the government keeps none of the money collected from the levy. Instead, it redistributes all of it – close to $1.8bn in its first three years – back to taxpayers in the form of tax cuts.”

And for people in rural areas there were “extra cash and tax benefits.”

These features help explain why after a decade the tax retains widespread support.

The EU could have had a revenue neutral carbon tax too – but, naturally, it went for the immensely more complicated option of an emissions trading scheme (ETS).

Thanks to design flaws such as distribution of free permits to favoured industries, the price of carbon produced by the scheme has a history of crashing – and thus undermining incentives for investment in clean technologies. Moreover, not being revenue neutral, there’s no direct dividend for citizens.

Still, what’s bad for ordinary people and the environment has been good for brokers and lobbyists – so there’s always that.

If the global elites really care as much about global warming as they say do then it is vital that measures to combat greenhouse gas emissions are not aligned with the interests of the knowledge worker class and against everyone else. This must not become an open-versus-closed, globalist-versus-nationalist, anywhere-versus-somewhere issue. Green taxation needs to be socially neutral as well as revenue neutral.

Let’s not forget that globalisation is product of hyper-mobility which in turn is a product of fossil fuel consumption.

Perhaps this is something the global elite could consider at the next World Economic Forum – or even as they travel to Davos in their private jets and limousines.

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Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.

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