The Treasury has finally published its net zero review, and it confirms the inevitable: taxes will have to go up across the board. Who’d have guessed that “you can’t put a single figure on it” meant “it’ll cost a fortune”?
The Treasury warns that “beyond taxation and public spending that directly apply to households, [net zero] will affect households directly through the goods and services they buy and indirectly through the costs on businesses“. Raising the cash will also mean rethinking the tax code, because revenues from fossil fuel related taxes will inevitably drop to zero by 2050. Fuel Duty, Vehicle Excise Duty, Landfill Tax, the Emissions Trading Scheme, and the Carbon Price Floor will all have to be scrapped at some point.
Macro-economic analysis released by Bank of America says that to achieve net zero globally will cost $150 trillion in capital investment by 2050, an amount so colossal that the investment bank’s economists say it is beyond the capability of the private sector and taxpayers combined. It will, the economists argue, require central banks globally to undertake massive quantitative easing. Despite that analysis none of the increased public spending in Britain will be funded by additional borrowing, according to the Treasury:
“Seeking to pass the costs onto future taxpayers through borrowing would deviate from the polluter pays principle, would not be consistent with intergenerational fairness nor fiscal sustainability, and could blunt incentives.”
Instead, HMRC is “exploring options to further strengthen the analytical approach to monitoring, evaluating and quantifying the environmental impacts of tax measures”, like introducing a plastic packaging tax. “Overall, a combination of tax, regulation, spending and other facilitative levers will be required.” In other words: brace yourselves.