Paying what we owe
People should be taxed on what they use of the earth\'s resources, not what
Monday November 22, 2004
The modern world has lost much of its connection with the earth. It is
as serious as shoppers losing sight of their bank balance. For consumers of
the earth\'s resources there is no check on our profligacy; we are so
removed from the consequences of our actions that we live comfortably in
denial, ignoring the prophets of doom who predict an impending
environmental crisis of epic proportions.
Planet Earth possesses an extraordinary capacity, but it is not
limitless. How then shall we live and, in particular, how should those in
business and industry deal and trade in the earth\'s resources? Taxation
provides for a degree of redistribution of wealth, although national and
global evidence suggests that the gap between rich and poor is growing larger.
The most substantial tax revenue comes from taxing income, especially
labour. The time has come for all political parties to rethink
fundamentally this balance. We should gradually shift from taxing labour to
levying taxes on the use of original resources.
There are two reasons. First, this would exercise more of a discipline on
our use of original material, which would encourage us to conserve and
replenish the source. Second, it would stimulate labour and encourage us to
be creative and innovative in our use of original material. Current
industry and business seem to be based upon using minimum labour in
relation to resources used; we urgently need to invert the ratio into the
minimum amount of resources used in relation to labour.
Taxation has always been a form of value-driven social engineering. Tax
differentials and tax breaks affect behaviour. Changing the balance of
taxation away from labour to resource would suit all three major political
parties. Conservatives would welcome the rewarding of enterprise, Liberal
Democrats would value the lessening impact on the environment, and Labour
would see it as a means of sharing goods more fairly.
Changes in the tax regime would need to be introduced gradually, but
shifting it from one area to another would keep the overall tax take the
same and make the change tax neutral to the economy. Interventions would be
needed toensure that the poor and unemployed had access to the basic
requirements for human flourishing.
The Joseph Rowntree Foundation has just published research on reducing
the impact of green taxes and charges on low-income households. There are
real concerns that green taxes could hit the poor disproportionately, but
they believe it is possible to devise strategies that would relieve
hardship. For example, all water could be metered and the first x litres
per household member would be free. Thereafter water would be taxed so that
those using it for car washing, large gardens, swimming pools, etc would
pay for their water according to use. This would drive down consumption
while at the same time protecting the needs of low-income households.
Shifting the burden of tax from labour to resource in today\'s world would
mean that the most successful businesses would be those which deployed
labour as creatively and innovatively as possible so as to use the minimum
amount of original material in their products.
Much thinking has already been done about our use of carbon and how we
might reduce the amount of emissions. \"Contraction and convergence\" has
been proposed to ensure a fairer use of carbon across the developed and
developing worlds. The aim is to redistribute all nations\' carbon credits
so as to exert a more disciplined, moral and responsible use of carbon.
Excessive carbon emissions by richer countries change the climate,
warming the globe, melting ice, raising sea-levels and flooding some of the
poorest countries in the world. Allowing countries to trade in carbon
credits is a form of taxation that disciplines and drives down the use of
original resource and allows for its absorption within the capacity of the
It is for economists and politicians, together with the business
community, to decide on how exactly we share the earth\'s resources with the
sense of responsibility that the \"rich\" should have for the \"poor\", and the
present should have for future generations. As a pastor who sees the
consequences of poverty both in this country and in others, I urge those in
business to embrace an ethic of the earth and a greater sense of social
responsibility. Ultimately, decisions taken will depend on moral values; we
should not spend the earth and squander the resources that belong also to
· The Rt Rev James Jones is the bishop of Liverpool