If countries wish to increase employment, is it not odd that they should tax it heavily? And if they wish to cut pollution, is it not odd that they tax at a low rate some things that create pollution, while actually subsidising some heavily-polluting activities?
Ask these simple questions and the inappropriate nature of taxation systems is glaringly obvious. Yet up to now the whole idea that taxation should be reformed to promote employment and cut pollution has too often been seen either as crankiness, or yet another way for people to attack the Government. Naturally there are practical problems, as there must be whenever one contemplates a substantial change in taxation. But what ought to be a mainstream discussion about the best way of effecting change has only taken place on the political fringes.
This is not a particularly British issue, though we share with other developed countries a tax system that is singularly ill-fitted to economic needs. In some ways the UK tax system is more appropriate than that of many other countries, for our payroll taxes are low by European standards. And we are belatedly increasing taxation on energy use, by putting VAT on domestic fuel and increasing petrol duty in real terms.
But much, much more could be done. As it is, in Britain at least, environmental taxation is attacked from the left as being unfair to the poor (witness Labour's opposition to VAT on fuel) and from the right as being one more way of increasing taxation. Earlier this month a paper from the Institute of Economic Affairs actually recommended against taxation to restrain the use of fossil fuels on the grounds that if increased carbon dioxide led to global warming this might be rather a good thing.
So it was with a touch of evangelicism that environmental consultant WBMG held two seminars yesterday designed to bring the whole debate into the mainstream. In the view of one of the speakers, Ernst Ulrich von Weizsacker, director of the Wuppertal Institute, all energy prices should be increased by 5 per cent a year and the money used to cut income tax and VAT. (These ideas are further discussed in his book Earth Politics, published today by Zed …