In this morning's video, I argue that we all know what the ‘bads' in our economy are - tobacco, alcohol, sugar, carbon, plastics, and more. Some of them we tax heavily because we know they they are ‘bad'. But sugar, plastics and even carbon are still getting an easy ride. It's time we tackled them properly
The audio version is here:
The transcript is:
If there is one tax policy that every politician in the UK should adopt, it's that we should tax bads.
Now, that of course needs some explanation. What is a bad? Well, of course it's something that is bad for us. That's why I give it the name.
What is bad for us? Well, tobacco is bad for us.
Very clearly, alcohol, at least in excess, is bad for us.
We now know that sugar is very bad for us because that is the basis of the ultra-processed food crisis that we have that is fuelling obesity in this country, reducing our productivity and creating a massive demand on the NHS, not least because of the significant rise in type 2 diabetes that it is causing.
And there are other bads as well. There's carbon. We know the consequence of the overuse of carbon. It is global warming.
And there are knock-ons from the carbon crisis as well. We know that cars are actually potentially bad for us. Not because of the fact they use carbon fuels, because they might actually not. They could be electric. But their tyres cause massive problems in terms of pollution as well. So large cars are a bad.
So, too, are plastics, of course. We know they are massively damaging to the environment as a whole, and especially to things like the sea.
These are all bads, things that ultimately undermine our well-being and cost us as a society a great deal of money.
Now we're used to the idea of taxing some of these bads.
Tobacco is very obviously heavily taxed, vaping not so much so, by the way, and it too is a bad.
Alcohol is very heavily taxed, but it doesn't appear to be stopping abuse by some, although Scotland is having a good go at addressing this issue.
Sugar? There is no such thing as a sugar tax in the UK. Instead, we have a big sugar lobby who are arguing against everything that the government is trying to do to prevent the abuse of sugar which is so addictive and so harmful to so many. So, I'm afraid to say we need a sugar tax to reduce the amount of it that is consumed.
And carbon? Look, we have certain degrees of carbon tax. Of course, we do. There are fuel duties and various things. But there's been an enormous reluctance to increase those. The car lobby is so powerful.
And talking about cars themselves, whilst there are taxes on cars, they are not progressive. In other words, they are not providing sufficient support to low-polluting and low tyre burning cars.
And they're supporting the use of SUVs, the rise in number of which has more than compensated for any savings from fuel efficiency over the last decade or so.
Plastics? Scotland has tried to do a returnable bottle scheme, and it's been killed. Why? Because the industry doesn't like it, because the government doesn't like it in London.
We are not taxing bads enough.
There are problems. These taxes on bads tend to be regressive. In other words, they are paid in higher proportion compared to income by those on lower income than they are by people on higher income. So, clearly, we need to compensate for that in the rest of the tax system.
But we know how to do that, and in the Taxing Wealth Report that I have written I have explained that there are plenty of ways to tackle that problem and reallocate income to those who are on lowest earnings to make sure that they can continue to actually live despite these additional taxes. So, we can tackle that issue, but what we can't tackle are the long-term consequences of not addressing these issues.
Because if we don't tackle those, well it may just be too late in the case of carbon and plastics and other things because we won't be able to solve the mess we create.
And it may also be late for some of the other issues as well. In particular, when we look at type 2 diabetes, from which so many people now suffer. That's a deadly disease, and I want to see it solved. And it can be cured by reducing sugar consumption.
So why aren't we taxing the bads?
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Wealth inequality is also bad as those without are most in need, and of course, tax is one way to reduce wealth inequality.
That tax stick is one half of the equation.
We also need carrots and to provide incentives for “goods” .. often harder to quantify.
The circular economy of reuse,recycle,reclaim struggles while oil companies write off rigs.
Until a full systems approach is widely understood and adopted, throughout industry and services, and especially financing, waste and externalities are still built into everyday linear produce-use-discard structures.
Bankers and politicians need to be taught systems, and the work of Donella Meadows be as familiar as compund interest.
The UK introduced a levy on sugary soft drinks in 2018. Many manufacturers reformulated their drinks to reduce the amount paid.
The UK introduced a plastic packaging levy in 2022. Many manufacturers have started to use non-plastic alternatives.
Obviously more can be done. My point is that tax can drive behaviour if pricing-in-externalities drives people towards available and more desirable but perhaps marginally more expensive alternatives.
Agreed
We need to do more though
The IEA, the ASI, Lord Stern and many others have been advocating the neoliberal approach of carbon taxation for a very long time now. If any of them are reading this they will be thinking of the line:
“I tell you that there will be more joy in heaven over one sinner who repents than over ninety-nine righteous ones who do not need to repent.”
I have never been been entirely convinced by carbon taxation
Some, for sure, to change behaviour
As a major revenue earner? What happens in that case wwhen behaviour changes?
Some 22 billion cubic feet of gas were flared in the North Sea alone in 2022. (down from over 30 billion bcf in 2018.)
There certainly ought to be some kind of regulation of this criminal waste of fossil fuel energy, whether by carbon tax or alternative.
However, the concept of tradeable carbon credits fills me with horror.
Another invitation to casino capitalists is not the way to go.
We already have an emerging, greenwashing, carbon offsetting market buying up farmland to convert to trees.
As even perfectly good grade 3 farm land is economically convertible by milking grants etc., then that shows how easy that market is skewed, already.
You answer your own question within the video. We don’t tax the bads because very wealthy people form a powerful lobby.
Richard…I would include in the bads gambling.
The industry should be made to fully compensate and support every individual that they addict.
Many will argue that freedom of choice should prevail and on the whole I agree with that but when it results in perverse outcomes then full responsibility should be taken by those causing the perversity.
Agreed
Richard…I think that there may have been a small failure of logic in the post.
We tax bads to control / alter behaviour ie to make continued consumption of the bad more painful.
If we then “reallocate income to those who are on lowest earnings to make sure that they can continue to actually live despite these additional taxes” are we not then making the bad just as affordable and hence no pain, albeit at a higher price?
The bads will always be continued to be consumed by those with more disposable income, all other things being equal, but it was interesting, and gratifying, to see the effect on smoking by the simple action of making it illegal in public places. An example of how the ‘interventionist nanny state’ can be a force for good with an initiative that is now normalised and universally accepted.
Once you start factoring in addiction then of course you have a whole different social problem
I really don’t think your logic is right
We reallocate to maintain purchasing power
But now the goods are cheaper and so they are consumed instead
I say again, seed oils. Try https://www.amazon.co.uk/Big-Fat-Surprise-butter-healthy/dp/192522810X or for something more up to date from Dr Cate https://www.amazon.co.uk/Dark-Calories-Vegetable-Destroy-Health-ebook/dp/B0CQ863R3D/ref=sr_1_1 or for a quick fix try https://chriskresser.com/how-industrial-seed-oils-are-making-us-sick/
The problem with implementing a tax here is it would make almost everything on the shelves far more expensive than it already is. Quality nutrition is expensive. As a society we can pay to support our farmers or we can pay to support our Doctors. At the moment we appear Hellbent on doing neither. Ah well, it’s all going to crash and burn soon anyway…
I only recently realsied just how bad these really are…
They have disappeared from use in our house
Taxing the ‘bad’ is definitely good and we need to do more of it, tax ultra processed foods and red meat,
then use the money to subsidise fresh fruit and veg – esp organic. nuts and beans etc. encourage people to go veggie or vegan
Also free gym prescriptions for those with obesity and type 2 diabetes – encourage exercise and cycling etc.
improve public transport and reduce fares – so people don’t have to use their cars.
Subsidise small electric cars and tax SUV much more!
We also need to STOP subsidising fossil fuels! as well as taxing the companies heavily to pay for the damage they have done and invest in renewable energy and insulation of homes.
It’s probably more productive to feed the obese enough protein to amend their body composition. That means more fish, more meat, not less.
If I may add another “bad” to your list: meat, fish and dairy consumption.
We need to move away from the subsidies handed out to livestock and dairy farming and the fishing industry, which are devastating the environment and will never be able to adequately feed a growing global population.
We need to get to the stage where plant based alternatives are cheaper than animal products.
I feel I failed at being bad…
Plant-based substitutes aren’t alternatives. They lack the necessary nutrients we need to develop and grow. I agree some folk can get on ok on just a plant-based diet for a time but for the majority of us it’s a non-starter. Animals eat greens, we eat the animals. That’s what works. What we need to do not least for our own sakes is nurture our food better than we do, and in the case of the factory-farmed animals, far better.
We can do with a great deal less animal than you think
I have not eaten mammal for some time now
I will eat chicken and fish
But we can avoid the massive waste of eating mammals
Where do you source your chooks? I understand they can be bad for you as, like us, they are what they eat and one has to make some effort to find a chicken that isn’t loaded with PUFAs as a consequence. Chicken is such a broad church these days… pork’s arguably not a great choice either from an Omega ratio POV (though I love a decent porker myself 🙂 ). Grass-fed beef’s reckoned the best stuff out there in terms of the right ratio of Omega 6 to Omega 3. We should probably, most of us, in terms of health, all be eating a great deal more of it.
Wonder where they got this idea from:
“Stop the £40bn bank interest racket: Calls from across political divide to curb stealth subsidy for lenders”, msn.com 8 Jun 2024
https://www.msn.com/en-gb/money/other/stop-the-40bn-bank-interest-racket-calls-from-across-political-divide-to-curb-stealth-subsidy-for-lenders/ar-BB1nSk5u
Richard, the audio link here is for the video “There is no black hole in government funding”, which you did yesterday.
Apologies
Corrected. I am doing too much…
Thanks for telling me
Yet the govt seems desperate to support Britain’s sugar beet farmers. Couldn’t they encourage them to grow other crops instead?
From the Wiki on British Sugar
British Sugar is effectively the sole buyer of all of the sugar beet grown in Britain. This output comes from around 2,300 beet growers throughout Britain…. The former managing director, Paul Kenward, is married to the Conservative MP and Health Minister Victoria Atkins.[16] He has since been promoted to the parent company (ABF Sugar) as the CEO there.[17]
Maybe that explains it 🙂