According to the think tank Policy Exchange, Green Taxes could treble over the next 10 years, partly as a result of the cost of subsidising new green technology. Green taxes are seen as part of a wider restructuring of taxation, to encourage environmentally sustainable development and improve economic performance, making more jobs and bringing greater economic fairness.

Will Abbott of Randall & Payne, Gloucester says, “Green taxes are a classic example of the potential to use taxation to influence social or economic changes. The taxpayer is becoming increasingly sceptical as to whether green taxes actually deliver an environmental improvement, or whether they are merely a tax-raising measure dressed up in a green wrapper. It would be interesting to see if the changes to company car taxation have delivered a significant reduction in emissions.”

One reason green taxes make sense from an economic, social and environmental point of view is because they tax ‘bads’ instead of ‘goods’. Recent studies in Britain, the US and by the European Commission have found that replacing existing taxes on employment, incomes and profits (‘goods’) with taxes on energy use (‘bad’) can yield a threefold dividend: better overall national economic performance, higher levels of employment and a cleaner environment. Their goal should be to shift the balance between the use of human resources (now under-employed) and natural resources (now over-employed), which is why Jonathan Russell, UK200Group’s vice-president feels the term ‘green taxes’ is a “general misnomer unless they are specifically levied against something which is known to be environmentally damaging to reduced demand or consumption. It is time that politicians appreciated that the electorate are not idiots and would prefer simplicity and clarity rather than camouflage.”

Some feel that the current ‘green taxes’ are a political way to try and make something unpalatable more acceptable, such as fuel duty, aggregates levies. The Air Passenger Duty is promoted as a ‘green tax’ but air fuel is subject to very little tax as airlines would just stop buying fuel in the UK where possible to avoid paying it. Motorists and rail travellers get no such relief from their fuel tax burden so many ‘green taxes’ are seen as methods of raising money from individual taxpayers to fund Government expenditure.

If Government expenditure is to increase on 'green' issues then there must be taxes to raise that money, but, as Will Abbott says, “In reality much of the green technology is untried, and it is difficult to predict what will work and what will not. There is a focus on producing energy from renewable sources, but one sector where we are seeing growth is the development of technology that actually reduces the amount of energy being used, and this is surely a more beneficial strategy. Perhaps if we all target reducing energy use we can then look forward to a reduction in green taxation as well.”