The climate crisis and taxation

Bridgen, Paul and Büchs, Milena (2023) The climate crisis and taxation. In, Lymer, Andy, May, Margaret and Sinfield, Adrian (eds.) Taxation and Social Policy. Policy Press, pp. 238-266. (doi:10.51952/9781447364207.ch014).

Record type: Book Section

Abstract

Few commentators believe the UK government’s policy framework for achieving its target to reduce greenhouse gas (GHG) emissions to net zero by 2050 is sufficient. There is a strong case for a carbon or energy tax, but from a social policy perspective such taxes raise distributive concerns. Yet, as this chapter shows, taxation of carbon already exists in the UK in a range of fiscal instruments that affect the cost/price of GHG emissions. These have emerged uncoordinated with little concerted analysis of their distributive impact or the adequacy of benefit payments that mitigate impact. The chapter shows existing UK carbon taxation to be highly regressive with mitigation efforts wholly insufficient, particularly with respect to the lowest-income decile households. What is required, it is suggested, is a re-consideration of domestic energy taxation encompassing the development of fully worked through compensatory mechanisms, including universal services delivering basic needs.

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