Thursday, October 05, 2006

The Green Tax market approach - need to get it right at all levels 

Now an interesting one on micro-chipped wheely Bins. This is one of those doorstep issues that will help frame public understanding on much bigger themes so we need to get it right because if it balls up it will reduce credibility on wider issues.

The point of polluter pays charging, and the justification for the wider Green tax policy, is that economic pricing will lead to changes in behaviour as people take on board the information provided by the pricing. Now this change of behaviour through market information can be what us desired - a shift from waste channelled into landfill to waste channelled into recycling, and possibly a reduction in non-recyclable waste generation by households. All good stuff, as outlined by Chris Huhne in his support for this kind of initiative.

The Liberal Democrats support the ‘polluter pays’ principle. Allowing councils to charge for waste by weight provides an incentive by which householders can be rewarded for recycling their rubbish, by reducing the amount they pay. Any council embarking on waste charging must ensure that it has a state of the art recycling scheme. However, councils cannot be allowed to use such powers to simply raise extra tax – if people waste less, they should pay less. (Huhne)

But there is also the possibility of a market response in undesirable ways such as fly-tipping, dumping or whatever.

A number of local authorities already have problems with dumping of non-recyclable rubbish on roadsides, back alleys or whatever. If this change is not handles right I would expect the imposition of a per-bag collection charge for non-recyclables to lead to a visible increase in dumping and thus an increase in costs for surveillance, and for prosecutions for offenders if detected.

If the result of such schemes is indeed and increase in visible non-compliance this could lead to questioning of the logic of the wider Green Tax policy and a loss of public support for it.

Charging policies would need to be carefully worked out to increase the possibility of virtuous market compliance so that we don’t need an increase in state supervision and criminalisation of individuals.

For my part I have a feeling that per-weight charging would only have an effect if the charge was really appreciable, and that non-compliance would be so simple that the market solution would indeed be to mock the aims of the scheme through widespread dumping. I think we need to look very carefully at how all this could be set up if we are not to risk discrediting our new green tax initiatives.

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