Bocconi Students for Sustainable Finance

UK public supports green taxes to achieve net zero

A recent survey has found out that the majority of the British public would be in favor of a green taxes. Moreover, most of the UK citizens also support the idea that their government should increase spending to address environmental issues.

These findings could potentially set the bases for an eventual popular mandate to reform the British tax system. The poll was carried out on a national scale by Britain Think for Green Alliance, and it found really interesting data.

Reportedly, almost two-thirds of the interviewed people would support taxation on all practices that are environmentally damaging. Furthermore, asked to name the most urgent British priorities, environment ranked 3rd, after healthcare and jobs.

Among the most popular forms of taxation, the survey pointed out a potential carbon tax on producers as well as a Green VAT. However, some possible points of tension where also highlighted in a low consensus for levies such as road pricing, a measure that could serve to make up for the lost fuel duties revenue as cars are turning electric.

The Treasury is now coming up with its Net Zero Review, which will explain in detail “how the costs of achieving net zero emissions will be distributed”. The document, which should be published ahead of the November UN climate talks in Glasgow (COP26) will show how determined the government is towards this goal.

It is suggested that around £ 50 billion a year of UK capital spending will be needed to achieve the Net-Zero target. These costs, however, will be mitigated by the lowering operating costs from deploying greener solutions.

Chris Stark, chief executive of the Climate Change Committee, advised that the timing and form to implement these new potential taxations are crucial to avoid public insurrections.

“Tax is rarely popular. You can’t just raise a big tax and expect people to support it. It needs a holistic package, and you have to set up context for these changes and get public support” he said.

He also showed how the public is more likely to accept new greener taxes if they come as part of a well-posed package. For example, money raised from transport taxes would be used to finance new expensive non-polluting heating systems in houses.

However, it seems increasingly clear that, in order to meet its ambitions environmental targets, the British government will have to debate soon the hot and unpopular “road pricing” topic. The UK aims to reduce carbon emissions by 78% within 2035 with respect to the 1990s levels but the incoming shift to electric vehicles will cost the Treasury over £ 30 billion, and some extra revenue from a road pricing tax (a 6 P increase in income tax) could be very much needed.

Josh Buckland, adviser to former business secretary Greg Clark and is now at business consultancy Flint Global, agreed the government could not continue to shy away from direct taxes like road pricing. “The government needs to start low and move gradually, introducing pricing slowly so it grows, as fuel duties fall. It can also find ways to make it fairer, such as charging more in congested areas, and less for driving on quiet country roads,” he said.

Another area of public support that the survey highlighted is the common wish of British citizens to see more clarity in governments incentives which often result perverse and controversial. For example, building new houses can be currently done at zero VAT, but at the same time, renovating the very same houses (which would be critical to lower carbon emissions) is charged at the normal 20% VAT.

Similarly, the greener way to fuel cars, which is electricity, usually costs more than gas.

“The UK tax system is more fit for the fossil fuel economy of the past than a sustainable future,” said Libby Peake, head of policy at Green Alliance. “This doesn’t make sense when the government wants to ramp up climate action. Why should people pay more to live green and do less to harm the planet?”

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UK public supports green taxes to achieve net zero

 

A recent survey has found out that the majority of the British public would be in favor of a green taxes. Moreover, most of the UK citizens also support the idea that their government should increase spending to address environmental issues.

These findings could potentially set the bases for an eventual popular mandate to reform the British tax system. The poll was carried out on a national scale by Britain Think for Green Alliance, and it found really interesting data.

Reportedly, almost two-thirds of the interviewed people would support taxation on all practices that are environmentally damaging. Furthermore, asked to name the most urgent British priorities, environment ranked 3rd, after healthcare and jobs.

Among the most popular forms of taxation, the survey pointed out a potential carbon tax on producers as well as a Green VAT. However, some possible points of tension where also highlighted in a low consensus for levies such as road pricing, a measure that could serve to make up for the lost fuel duties revenue as cars are turning electric.

The Treasury is now coming up with its Net Zero Review, which will explain in detail “how the costs of achieving net zero emissions will be distributed”. The document, which should be published ahead of the November UN climate talks in Glasgow (COP26) will show how determined the government is towards this goal.

It is suggested that around £ 50 billion a year of UK capital spending will be needed to achieve the Net-Zero target. These costs, however, will be mitigated by the lowering operating costs from deploying greener solutions.

Chris Stark, chief executive of the Climate Change Committee, advised that the timing and form to implement these new potential taxations are crucial to avoid public insurrections.

“Tax is rarely popular. You can’t just raise a big tax and expect people to support it. It needs a holistic package, and you have to set up context for these changes and get public support” he said.

He also showed how the public is more likely to accept new greener taxes if they come as part of a well-posed package. For example, money raised from transport taxes would be used to finance new expensive non-polluting heating systems in houses.

However, it seems increasingly clear that, in order to meet its ambitions environmental targets, the British government will have to debate soon the hot and unpopular “road pricing” topic. The UK aims to reduce carbon emissions by 78% within 2035 with respect to the 1990s levels but the incoming shift to electric vehicles will cost the Treasury over £ 30 billion, and some extra revenue from a road pricing tax (a 6 P increase in income tax) could be very much needed.

Josh Buckland, adviser to former business secretary Greg Clark and is now at business consultancy Flint Global, agreed the government could not continue to shy away from direct taxes like road pricing. “The government needs to start low and move gradually, introducing pricing slowly so it grows, as fuel duties fall. It can also find ways to make it fairer, such as charging more in congested areas, and less for driving on quiet country roads,” he said.

Another area of public support that the survey highlighted is the common wish of British citizens to see more clarity in governments incentives which often result perverse and controversial. For example, building new houses can be currently done at zero VAT, but at the same time, renovating the very same houses (which would be critical to lower carbon emissions) is charged at the normal 20% VAT.

Similarly, the greener way to fuel cars, which is electricity, usually costs more than gas.

“The UK tax system is more fit for the fossil fuel economy of the past than a sustainable future,” said Libby Peake, head of policy at Green Alliance. “This doesn’t make sense when the government wants to ramp up climate action. Why should people pay more to live green and do less to harm the planet?”

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