Category Archives: Taxes

Gordon Brown’s Not-so-Green Car Tax

There is something rather fishy about Gordon Brown, the UK Treasury/Finance Minister, increasing taxes for larger cars from £200 this year to £300, then next year to £400 (a little less than $800) “to combat greenhouse gas emissions”.

Who in their right mind will be deterred by a £400/year car tax after having bought, say, a £40,000 Land Rover???

On the other hand, if Brown had raised taxes to £3,000 or more, there would have been just too many brand new cars suddenly destined to be recycled (or sold to places with lower taxation): hard to see the greenery of that situation.

Perhaps it could have made more sense to introduce a £3,000+ yearly tax on new large cars: like a “buy at your own risk” alert for everybody thinking of getting a pickup truck.

Or maybe not: the unintended consequence would be to keep old cars on UK roads…

The whole thing will just end up as a boost for the UK Treasury, with no discernible advantage on the CO2 emissions side.

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Methinks the old tax of £200 was just too cheap. But fellow big-car drivers are the first victims of the Anthropogenic Global Warming steamroller, that provide the likes of Brown with the excuses necessary to sneak in tax increases of all sorts.

Anyway, I suggest drivers of smaller cars to refrain from schadenfreude, drawing pleasures from so-called gas guzzlers’ misfortunes.  

AGW hysteria will soon hit your wallets too.

Cato Institute Scholar Lauds the Power of Taxes

Perhaps Arnold Kling may want to reconsider his thoughts after realizing he has just argued for higher taxes, and heavier governmental intervention in the energy sector:

The most important, inconvenient truth about energy policy is that there is no justification for a subsidy for good energy. Subsidies for wind farms, solar energy, ethanol, and so forth, whether they come from government “energy policy” or personal carbon offsets, are pure pork.

It may be true, as Greg Mankiw argues in his Pigou Club Manifesto, that higher taxes on bad energy are justified. Figuring out the optimum tax is a difficult challenge, even for the Pigou Club. However, once the correct tax is set, that by itself provides all the incentive that is needed to get people to switch to good energy. The tax on bad energy will raise the price that people are willing to pay for good energy. That higher price for good energy is all of the incentive that producers need to undertake the effort to provide more good energy.

It would have helped to have a little more reasoning on how difficult the challenge to find what a “optimum tax” is, and how dangerous things can become if that’s miscalculated.

As things stand, I can imagine such details getting forgotten whilst certain people will use the article “The Political Economy of Alternative Energy” to support strong governmental activism.

Or perhaps it’s a matter of finding the lesser of two evils? Was Kling’s a way to demonstrate that pork looks worse than taxes in the eyes of a person advocating freer markets?