Wednesday, April 18, 2007

Brown's Air Passenger Duty Rise Increases Emissions

The Sun is terribly impressed by "Stormin' Gordon" pointing out that "the Tories have NO plans to reinstate the pensions dividend he axed in 1997". Given that the Tories have made clear they plan to put alternate arrangements in place to reverse the damage (ending stamp duty on shares has been suggested) this is a pretty lame rebuttal.

Barely a day goes by when evidence doesn't come to light of some new Brown incompetence. Now this research by Mayor and Tol (who was cited by the BBC protesting at Stern's misrepresentation of his work) for the Economic and Social Research Unit in Dublin suggests that Brown's increase in Air Passenger Duty was a shoddy idea even without applying it retroactively like a crazy person:

"We use a model of domestic and international tourist numbers and flows to estimate the impact of the recent and proposed changes in the Air Passenger Duty (APD) of the United Kingdom. We find that the recent doubling of the APD has the perverse effect of increasing carbon dioxide emissions, albeit only slightly, because it reduces the relative price difference between near and far holidays."

That's right. He's doubled the tax on flights and succeeded in slightly increasing carbon dioxide emissions from air travel. Brilliant.

Apparently the Tory plans, which only tax flights beyond a certain number of miles per person, are better. The allowance for short range flights mitigates the Air Passenger Duty distortion. However, the Conservative proposal would have roughly the same effect as abolishing Air Passenger Duty. Why can't we just do that!

This is almost a textbook example of unintended consequences. A poorly worked out policy which will have the opposite effect to that intended. At the same time it places an increased burden on ordinary Britons taking well-earned holidays. Yet more evidence that Brown should be in mortal fear of losing his current job rather than expecting promotion.

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