Why environmentalists should care about tax

By Matthew Crighton, sustainable jobs advisor

Imagine living in a society in which polluters pay the full price of damage to our environment; enough public investment flows into climate change programmes to guarantee that we meet our commitments; and actions needed to protect and restore nature are fully funded.

For this to become a reality in Scotland and the UK we will need significant changes in our tax system. Even if we start from wanting to protect peatlands or improving air quality, environmentalists need to care about tax. 

One of our starting points can be the Polluter Pays principle which is a cornerstone of environmental law. The problem is that in our economic system, this principle does not apply.

Where nature has not been taken into private ownership already, it is taken for free or polluted without charge. The atmosphere is the clearest example – emissions of industrial pollutants are damaging human health but the costs have been borne by communities and the health system, not the emitters. The greenhouse gases changing our climate exemplify this at the global scale. The same applies to fresh water and the oceans. 

Another starting point is the principle of tax justice – meaning that rich people should pay more than the poor, as a share of their income and wealth, into the taxes which pay for public spending and provision – which we take for granted is a foundation of our tax system. (In fact it isn’t – for example VAT which raises 15% of the UK’s government revenue, is regressive, having a negative impact on inequality).  

Linking this with ideas of climate justice, environmentalists are increasingly calling for the funding urgently needed to repair nature and climate to come in part from a tax on the wealthy, whose wealth has been accumulated through an economic system which has done that damage. 

Tax Justice Scotland

The recently-founded Tax Justice Scotland is calling for a tax system which contributes to a more equal society rather than one which deepens economic divides. Friends of the Earth Scotland is an active member, alongside a very broad coalition including trade unions, anti-poverty, equalities and international development organisations – its foundation and development have been led by Oxfam. 

One of the coalition’s key asks is ‘Tackle Climate Change by Taxing Pollution: Wealthier people tend to pollute more and, often, much more. Let’s invest in climate action by taxing polluters fairly. Taxes should incentivise us to pollute less, while supporting a just transition to a greener future’. 

While we need to press for radical changes to taxation by the UK Government, where the main powers lie, there is a lot which the Scottish Government can already do with the powers which are devolved. Some of the ideas which the Coalition is asking political parties to include in their manifestos are: 

Transport – Air Departures Tax, Frequent Flyer Levy 

Flying is the most polluting form of travel and is disproportionately used by the wealthy.  The Scottish Government has failed to use its power over Air Departures Tax to discourage flying, particularly within the UK. A frequent flyer levy would see taxes increase for people who are taking lots of flights within a given time period. 
 

Carbon Emissions Land Tax  

 
The Carbon Emissions Land Tax, proposed by the John Muir Trust would apply to large landholdings (over 1,000 hectares). It would mean land managers would be taxed based on how much pollution their land causes – so big polluters would be taxed more by their local authorities. This revenue could then be used to finance community-based projects aimed at delivering environmentally and socially just land management.  

Reform of local government taxation and funding 

Council Tax is a regressive and outdated tax which must be reformed. Local authorities should be able to make choices that can better respond to the public services needs in their areas and help address the growing inequality in our communities.