[TheCrackInTime]

V441 - Carbon Tax Bill 2012, Rt. Hon. JPKC

Carbon Tax Act 2012

An Act to institute a tax on carbon dioxide emissions so that the market cost of causing such pollution reflects the social cost of the damage it incurs globally.

BE IT ENACTED by The Queen's most Excellent Majesty, by and with the advice and consent of the Commons in this present Parliament assembled, in accordance with the provisions of the Parliament Acts 1911 and 1949, and by the authority of the same, as follows:-

Part I: Carbon Tax
1 The Office for Carbon Taxation
(1) The OCT is founded as part of the Energy Department.
(2) It is responsible for estimating the average amount of equivalent carbon dioxide (CO2e) in the average metric ton of any greenhouse gas emitted (into the atmosphere) by each company in the United Kingdom.

2 Taxation
(1) The rate of taxation is to be £30.00 per metric ton of CO2e emitted into the atmosphere.
(a) This figure should then be raised by £1 each subsequent year.
(b) In addition, both amounts shall be linked to the rate of inflation (CPI).
(2) This tax shall be applied to the operations of all liable companies in the UK.
(3) The tax shall be collected quarterly, based on the estimations of the Office for Carbon Tax for each liable company.

3 Hydrocarbon Oil Duty
(1) Hydrocarbon oil duty rates are to be set as outlined in Appendix I.

Part II: Appropriations
4 Value Added Tax
(1) In section 2(1) of VATA 1994 (rate of VAT), for "5 per cent" substitute "4 per cent".

5 Research and Development
(1) A sum of £2bn will be added to the annual research and development budget.
(a) This additional expenditure shall exclusively fund research into types of energy that could foreseeably reduce systemic reliance on fossil fuels.

6 Disaster Relief Fund
(1) The Disaster Relief Fund (DRF) is hereby established as a public resource.
(2) A sum of £1bn will be contributed annually to the DRF.
(3) The DRF is to be accessed and distributed at the discretion of the Government.
(4) It is used to provide pecuniary assistance in the event of any social or environmental hazard.

Part III: Abrogations
7 Climate Change Levy
(1) The CCL is hereby abolished.
(a) As is the Carbon Price Floor.

8 Emissions Trading Schemes
(1) The Carbon Reduction Commitment Energy Efficiency Scheme is hereby abolished.
(2) The UK is no longer subject to the Emissions Trading Scheme.

Part IV: Miscellaneous
9 Short Title
(1) This Act may be cited as the Carbon Tax Act 2012.

10 Commencement
(1) This Act comes into law on the 1st January 2013, following Royal Assent.

Appendix I

Petrol: £0.7011 per litre
Diesel: £0.7011 per litre
Biodiesel: £0.7011 per litre
Bioethanol: £0.7011 per litre
Aviation gasoline: £0.4560
Light oil: £0.8129
Road fuel gas other than natural gas: £0.4294 per kg
Natural gas used as road fuel: £0.3343 per kg

Notes

Why tax CO2?

Spoiler:

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The above graph, produced by the IPCC, shows a number of scenarios for global temperature increases - read the link provided for a more detailed explanation of why that's a bad thing, and how human activity has caused it. If we can all agree that global warming is the result of a massive spike in carbon dioxide, which is the general consensus of the scientific community, then we can see that any social cost occurs as a result of us. This tax is Pigovian in that it tackles a 'negative externality', it is intended to correct the market outcome - the social cost of pollution is not covered by the private cost of polluting while a carbon tax is not in place.

Why £30?

Spoiler:

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Page 40, 9.11, "Estimating the Social Cost of Carbon Emissions", Government Economic Service Working Paper 140 assessed various proposals for carbon taxes and found that the most sophisticated estimation came from the Eyre Paper, 1999. This proposal was based on 2000 money, and so I've increased it in line with the increase in relative value of the pound, and rounded to the nearest ten - this gave a figure of £90 per metric ton of carbon, this figure was then divided by 3.7 as the tax is collected based on MTs of carbon dioxide. This gave a figure of £24, which was then increased upwards to £30 to reflect the variety of views in the scientific community (as shown in the IPCC's summary of social cost evaluations).

Why tax companies and not individuals?

Spoiler:

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We all contribute to pollution, most of us drive cars etc., however what we put in as individuals is completely dwarfed by what industry donates. It is also significant that a company's emissions are much easier for the Government to realise. So we shouldn't tax individuals for GHG because it wouldn't be worth it - besides, how many of us have directly caused over one metric ton of carbon dioxide? Very few.

Why lower VAT/increase the R&D budget?

Spoiler:

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A tax on emissions will affect the consumer price of electricity in the UK, since 75.7% of the stuff we generate comes from fossil fuels (coal and natural gas). This will be regressive since an increase in the cost of energy impacts poorer households more - to counteract this, the Bill, using the additional revenue, lowers VAT (which is the biggest regressive tax left in the MHoC). The R&D increase simply will speed up the big transition to a clean energy economy - it's much more of an investment than an state expenditure, we can look forward to the Exchequer receiving the £2bn back easily.

Why abolish those other schemes?

Spoiler:

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The carbon tax introduced here renders them moot. In addition to this, trading pollution allowances is nowhere near radical enough to effect the change needed to reduce greenhouse gas emissions, as science journalist Larry Lohmann explains here.

Costings

Spoiler:

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Changes:
1) Carbon Tax; 523m x £30: +£11.1bn
2) Hydrocarbon Oil Duty (rate increase); +£4.7bn
2) Value Added Tax; 5% --> 4%: -£5.4bn
3) Climate Change Levy; --> nil: -£0.7bn
4) R&D Budget Increase; -£2bn
5) Disaster Relief Fund; -£1bn
+ £6.7bn

Total revenue from affected taxes:
1) Carbon Tax: £11.1bn
2) Value Added Tax: £20.9bn
3) Hydrocarbon Oil Duty: £36.2bn
4) Climate Change Levy: £0

Second Reading

i. The estimations regarding the CT's tax base have been reduced (thanks to Stanlas for recognising the initial error), it is now c.370mt per year - despite this, it now includes GHGs other than carbon dioxide (such as methane and nitrous oxide).
ii. Hydrocarbon oil duties have been increased by 15% each. Recent VAT reductions (including the measure in this Bill) mean that the cost of fuel has been slashed - the carbon tax alone, as several people pointed out, would not cover the CO2 emitted from transport, the 15% increase would mean that the social cost has been incorporated into fuel duty.
iii. The proposed VAT reduction will now be 2% in light of alterations made in the Welfare Act.
iv. The R&D budget increase (earmarked for green research) has been doubled.

Third Reading

i. Since the Welfare Act has reduced VAT to the preliminary target rate of this Bill's Second Reading (5%), the proposed reduction is now just 1%.
ii. I've incorporated a disaster relief fund into the Bill. The main reason for taxing pollution is to retrieve the money that climate change costs, it's only prudent to have some of this money specifically earmarked for the natural problems that could (and have) affect(ed) the UK - problems that the government is expected to provide for. Floods, droughts, storms - any form of freak weather.
iii. The surplus is now +£6.7bn. That comes off the £90bn budget deficit.
iv. Small mistakes in the formatting, and the configuration of the carbon tax, have been ironed out.

[JPKC]

Aye!

[RoryS]

Aye

[TopHat]

Aye.

[Moleman1996]

Nay

[jesusandtequila]

In it's current state - no. I don't disagree with the principle and I urge a re-submission.

[JPKC]

(Original post by xXedixXx)
QFA

(Original post by tufc)
QFA

(Original post by Jarred)
QFA

(Original post by Life_peer)
QFA

(Original post by toronto353)
QFA

Voting 'no' is fine but I think it's a bit discourteous to do so without actually giving a reason. The MHoC's entire purpose is debate.

(Same goes for anyone about to do the same...)

[JPKC]

(Original post by jesusandtequila)
In it's current state - no. I don't disagree with the principle and I urge a re-submission.

I don't think the issues you raised in the third reading were enough to warrant a complete re-submission. VAT had already been lowered drastically and there are very good reasons to keep a surplus in place. Likewise, I know you object to 5/6, but I didn't actually discover why. They are both very inconsequential aspects of the Bill whatever your opinion on them.

As for lowering the £30 rate to £25 that as well is IMO not a very big deal. Had a £25 rate been introduced in 2008, which it could have been, it would have risen to £30 by next year when this Bill would come into effect.

[toronto353]

(Original post by JPKC)
Voting 'no' is fine but I think it's a bit discourteous to do so without actually giving a reason. The MHoC's entire purpose is debate.

(Same goes for anyone about to do the same...)

No it isn't. The debate has gone. You can't change the Bill at this stage and so there's no point in debating it when you can't change it to reflect why we've voted no.

[JPKC]

(Original post by toronto353)
No it isn't. The debate has gone. You can't change the Bill at this stage and so there's no point in debating it when you can't change it to reflect why we've voted no.

I was raising the issue that neither yourself nor any of your UKIP MPs have voiced any opinion on the Bill at any of its three readings! Despite this you all obviously have opinions on the Bill seeing as you've gone to the effort of clicking 'no' so quickly. I wonder why anyone should bother putting effort into bills if this is the general attitude so many people have towards them, it's a systemic problem for the House.

[toronto353]

(Original post by JPKC)
I was raising the issue that neither yourself nor any of your UKIP MPs have voiced any opinion on the Bill at any of its three readings! That just, as I said, strikes me as discourteous and not in the spirit of the MHoC.

Well it would have pointless surely when the author of said Bill was banned for a substantial period of time?

[toronto353]

(Original post by JPKC)
I was raising the issue that neither yourself nor any of your UKIP MPs have voiced any opinion on the Bill at any of its three readings! Despite this you all obviously have opinions on the Bill seeing as you've gone to the effort of clicking 'no' so quickly. I wonder why anyone should bother putting effort into bills if this is the general attitude so many people have towards them, it's a systemic problem for the House.

See above reply, but also the vast majority of MPs do the same, but you don't criticise them. Back off UKIP when you don't bother calling up other parties.

[JPKC]

(Original post by toronto353)
Well it would have pointless surely when the author of said Bill was banned for a substantial period of time?

One week, for one of the three readings - besides, debate can occur without the proposing member present, as it did. Let's not pretend that this isn't a problem.

(Original post by toronto353)
See above reply, but also the vast majority of MPs do the same, but you don't criticise them. Back off UKIP when you don't bother calling up other parties.

I'll raise my objections with any member that does it. My initial comment was directed at MPs in three parties.

[toronto353]

(Original post by JPKC)
One week, for one of the three readings - besides, debate can occur without the proposing member present, as it did. Let's not pretend that this isn't a problem.

If people don't want to debate specific Bills, they don't have to. If they post and don't expand, then that is a problem as they should be expanding their points. Why are you targeting just UKIP? I'm not calling you out for failing to vote because you were banned because you were unable to behave properly on a internet forum am I?

[toronto353]

(Original post by JPKC)
I'll raise my objections with any member that does it. My initial comment was directed at MPs in three parties.

Then targeted TSR UKIP because I replied. So I replied and as a result you attacked TSR UKIP, does that encourage me or my party to comment on your Bills in future? No.

[JPKC]

(Original post by toronto353)
Then targeted TSR UKIP because I replied. So I replied and as a result you attacked TSR UKIP, does that encourage me or my party to comment on your Bills in future? No.

I'm asserting that TSR UKIP, like other parties, has lazy MPs. Bite me. If you disagree by all means try and justify their absence from the proper debates that happen in the House (and by debates I don't mean bitching on the Lib Dems).

[toronto353]

(Original post by JPKC)
I'm making an observation that TSR UKIP, like other parties, have lazy MPs.

In this one occasion we didn't comment no. So what?

Bite me.

Ooh good comeback.

[toronto353]

(Original post by JPKC)
If you disagree by all means try and justify their absence from the proper debates that happen in the House (and by debates I don't mean bitching on the Lib Dems).

Well I think that you take the crown with regards to bitching on the Lib Dems, but as I have said, if my MPs don't want to debate this one Bill, then they don't have to do so.

[Morgsie]

(Original post by JPKC)
I'm asserting that TSR UKIP, like other parties, has lazy MPs. Bite me. If you disagree by all means try and justify their absence from the proper debates that happen in the House (and by debates I don't mean bitching on the Lib Dems).

(Original post by toronto353)
Well I think that you take the crown with regards to bitching on the Lib Dems, but as I have said, if my MPs don't want to debate this one Bill, then they don't have to do so.

I would like to say that the last Lib Dem bashing and bitching session happened over a week ago and the PM and DPM was not involved.

[JPKC]

(Original post by toronto353)
Well I think that you take the crown with regards to bitching on the Lib Dems,

Last term, perhaps. This term, definitely not. Oh and I don't approve of crowns, FYI.

but as I have said, if my MPs don't want to debate this one Bill, then they don't have to do so.

Well if you all continue it then I'm sure the Speaker will have a word. It's not my responsibility to deal with the issue, I'm just flagging it up because this is my Bill. Of course the exact same goes for non-UKIP MPs in the same situation.