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Green taxes need explaining or risk backlash: study

Governments must do a better job of explaining environmental taxes such as charges on driving in cities or higher electricity bills or risk a public backlash, a study showed on Friday.


Governments often fail to link green taxes to their goal of curbing energy use or helping a shift to renewable energies, according to Steffen Kallbekken, of the Center for International Climate and Environmental Research in Oslo. “People do not understand environmental taxes,” he told Reuters. “There is quite a strong belief that the revenues just disappear into a big black hole.” Kallbekken studied how people view green taxes by reviewing existing literature on European tax systems and looking at the responses given by 160 people to questionnaires in Switzerland.

“If politicians don’t provide better information about how these taxes work, it might not be politically feasible to implement them,” he said. Green taxation is likely to rise in coming years to help avert ever more heatwaves, droughts and rising seas predicted by the UN Climate Panel. About 190 governments meet in Poznan, Poland, from December 1-12 for talks on a new UN climate treaty.

Many people dislike tax of any sort but environmental taxes are meant to help change behavior -- rather than merely raise revenues for general government purposes ranging from hospitals to paying pensions, Kallbekken said. One example of how environmental taxes can win public support was a well-explained trial period for a congestion charge to cut traffic in Stockholm, he said. During the trial, traffic was reduced by 22%, rush hour travel times were almost a third shorter, accident rates fell and emissions of greenhouse gases dropped 10 to 14%.


“The congestion tax was very controversial before the trial period,” Kallbekken said. “But the trial gave people a chance to experience the benefits.” Swedish authorities also helped by earmarking revenues for road improvements and public transport. But earmarking revenues was often hard in practice. In Britain in 2000, he said the government abandoned a badly thought out fuel tax after protests from truck drivers. The tax system built in steady increases irrespective of underlying oil prices. In questionnaires, he said many people failed to understand how environmental taxes would benefit society.

His report looked at taxes that affect individuals, rather than taxes on industry or measures such as carbon trading. “The most important taxes would be fuel taxes and energy taxes on your gas and electricity bills,” he said. These could help curb energy use but take a lot of education to explain. He said US President-elect Barack Obama would face even bigger problems in seeking green taxes than in Europe. “In America you have an even stronger aversion to taxes than in Europe,” he said.

Taxes on cars, for instance raising the costs of gas guzzling vehicles while promoting smaller cars, were often unpopular and not very effective in terms of curbing carbon dioxide emissions. One way to introduce environmental taxes in the United States would be to cut income taxes, for instance, while raising green taxes, he said. (Reuters)