Tax is being used in new ways in the fight against climate change. On Tuesday European countries voted to create the world’s first carbon import tax.
The tax will be raised on goods entering the European Union. The rate will be based on the amount of carbon dioxide (CO2) emitted when the product is manufactured.
It attempts to stop European countries exporting their CO2 intensive production to nations with lower environmental standards. It aims to incentivise Europe’s trading partners to decarbonise their manufacturing.
This is an example of tax being used to incentivise better environmental behavior among companies and industry. Every country needs to do this to fight climate change.
A just transition
Last week climate activists, Extinction Rebellion held “The Big One” a four day rally to keep climate change on the agenda. However, we have a long way to go in the UK. According to a new poll, only a third of people think the government is doing enough to tackle climate change.
Indeed our government actually subsidises (IE gives money to) the oil and gas industry Since 2015 the government has given £20 billion more to fossil fuel companies than han the renewables industry.
This needs to stop. We should not be giving polluting companies tax incentives to continue with business as usual.
Instead we should be using tax to encourage them to decarbonise their production processes.
At Tax Justice UK we also believe that the transition to a more sustainable economy will require huge investment from the government in industry and new technologies. But this transition must be just.
It should be paid for, in part, by taxes on the very wealthy and wealthy companies. We agreed on a set of principles for a just transition alongside other organisations including climate groups.
Tax Justice UK recently undertook a project to define its long-term vision.
We asked ourselves: what kind of country do we want the UK to be in ten, 20 or 50 years’ time – and how can we change the tax system to get there?
These aren’t abstract questions. With inequality growing, public services on their knees and an impending climate emergency, it’s never been more important to define what an alternative future could look like.
We've recently spent time with other members of the tax justice movement thinking about how we address these problems. Below is the result.
What's our vision?
Our country is facing four major crises. There is an alternative and the tax system can play a big role in getting us there.
The first crisis we identified was the state of our NHS and public services. They’re on their knees and need more funding to survive. Our vision is for good quality public services, supported in part by higher taxes on wealth and the biggest companies.
The second crisis is rampant inequality. A small minority hold huge and growing wealth, while everyone else is getting poorer, with the cost of living crisis accelerating these trends.
We believe a country where wealth and opportunities are evenly spread across the population is possible. How do we do this? The tax system needs to be rebalanced so that the super-wealthy are taxed significantly more, with the money re-invested in supporting the country as a whole.
The third crisis is climate and environmental breakdown. We need rapid decarbonisation and a transition to a more sustainable economy. The tax system needs to raise money to support efforts to tackle global heating. We also need to end the way the tax system subsidises carbon emissions, for example the current big tax breaks for new oil and gas exploration.
Finally, our democracy itself is under threat with power and wealth concentrated in the hands of so few. Our tax system currently favours this elite. We want to see a society where the tax system is set up to help the majority, not just the rich.
All of our work aims to resolve these crises, using tax to pursue the vision we believe is possible.
This week’s four day strike by junior doctors is a maddening example of how under-funding public services is slowly ruining our country.
Junior doctors are demanding a 35% pay rise. They start their careers on a salary of £29,384, which is below the UK’s average income. Whilst the average doctor’s salary is £57,118, their pay is £9,000 lower than it would have been since 2010 if pay had kept pace with inflation and we hadn’t had a decade of austerity.
This has taken a heavy toll on the NHS. According to The Times, Australia is seeing a surge of British trained health staff tempted by the promise of better pay on the other side of the world.
Is it any wonder that the NHS has a shortage of around 8,700 doctors?
In January MPs urged the government to train more doctors, but just weeks ago the education minister threatened to fine universities that do so.
The self defeating logic of austerity reigns supreme.
It’s obvious we need to invest in training more NHS staff but we should also be paying them a competitive wage so they aren’t tempted to move to the other side of the globe to work.
We can afford this. Our own research set out six wealth tax reforms that would raise £50 billion a year to invest in our public services.
Tax cuts to come?
Far from looking to increase taxes on wealth to help rebuild our public services, sources close to the government are agitating for tax cuts… again.
In truth, taxes are up under this Conservative government and the reason for this is in part because the NHS needs more, not less investment to keep a growing and aging population healthy.
It’s time we had a sensible debate about taxation with wealth taxation at the heart of it, if we are to stem the brain drain of doctors leaving the country.
Tax Justice UK will keep pushing for a better debate in the media and among politicians.
The controversy over the Prime Minister’s tax details continued this week with a story in the Times.
New analysis from by the Economic Change Unit found that up to a quarter of all taxpayers pay a higher rate than the Rishi Sunak. This is despite the Prime Minister being a multi-millionaire.
Another piece in the Times sets out the unfairness of a system that taxes income from work more than income from wealth. This controversy looks set to run and run.
Should the state do more?
Most people get that without tax we wouldn’t have the NHS. But do people believe there should be a stronger social contract between the state and its citizens?
It’s a question that seems particularly urgent in the week that the government announced drastically less funding than was expected for social care.
In a series of opinion polls by our the Fairness Foundation people’s attitude to the state and the social contract were tested. Far from wanting a small state, Brits favour the state playing a key role in supporting people.
The largest majorities (above 80%) agreed that there is an important role for the state in delivering social care, early years and public transport.
If the reaction to the social care funding announced this week is any guide, we seem to have a government that is out of step with where the country is.
Hard times for billionaires?
It was a tough year for billionaires according to the latest Forbes Billionaires list published this week. In total the world’s richest people lost $200 billion, equivalent to the entire income of a country like Ukraine.
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