Policy context for environmental tax reform

Theme Geography and Environmental Studies

The Policy Studies Institute (PSI) Environment group has provided new insights on and informed the UK policy debate on environmental tax reform.

Pen and calculator on accounting paperwork.

Research in the PSI Environment group has shown that the main obstacle to environmental tax reform lies in its social and political acceptability, rather than in its economic or technical feasibility.  Although research on environmental taxes is long established, the PSI research programme has a distinctive focus on the influences of its social and political acceptability. Work by Paul Ekins and Simon Dresner has led to new insights on the design of environmental taxes and has played a key role in shaping the policy context for environmental tax reform through promoting and informing public debate.

The research approach involved interviews with policy-makers and business, and focus groups with the general public to assess which policy designs for carbon/energy taxes would best combine social acceptability with economic and environmental effectiveness. The outcome was a new agenda for addressing the social and political acceptability of environmental tax reform. It demonstrated the importance of these reforms as important, and perhaps essential, to achieve steep cuts in greenhouse gas emissions together with a fundamental policy insight that it needed to be part of a ‘policy mix’.

A major initiative to achieve impact was the Green Fiscal Commission for which Ben Shaw and Ben Watson of the PSI Environment group provided strategic support. The objective was to prepare the ground for a significant programme of green fiscal reform in the UK, to both assemble the evidence base for such a reform, and raise stakeholder and public awareness of it. Using media and other communication activities, the Green Fiscal Commission raised awareness and understanding of the options for environmental tax reform and stimulated public and political debate on them. The variety of impact activities was managed by the PSI Environment group, gaining high profile media coverage and having been acknowledged in speeches by key political figures such as George Osborne and Vince Cable.

The Green Fiscal Commission we regard as the best source of new thinking on the subject. Vincent Cable, speech to Green Alliance, 1 March 2010

Supported by: ESRC

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