Budget 2008: Green gimmicks?

Reports abound that a central plank of Alistair Darling’s first Budget will involve increasing Vehicle Excise Duty on the most polluting cars by around £1,000. Squarely aimed at reducing unnecessary vehicle emissions, the gas-guzzler grab forms the latest part of a patchwork of green taxes designed to help the Government make progress on its target to reduce CO2 emissions by 20% on the 1990 level by 2010. Simultaneously we can expect the Chancellor to make an announcement on fuel duty. The 2p increase pencilled in for this year looks set to be postponed in the face of strong opposition from hauliers and motorists already labouring under record oil prices.

But these mixed signals point to the problem with green taxes as a concept. A green motive is a necessary but insufficient condition for government action to raise the price of polluting activities. Political realities mean that those undertaking the activity to be taxed must be politically weaker than alternative targets for taxation.