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05 Jun 1998
Friends of the Earth and Forum for the Future have commissioned detailed econometric modelling of the effects of a commercial/industrial carbon tax, using Cambridge econometri[cs' MDM-E3 programme. This found that an industrial tax of $1 on every barrel of oil in 1998, increasing by a further $1 every year, would generate revenues of $6 billion- allowing a cut in employers' National Insurance Contributions [NICs] by 1 percentage point. This would result in a fall in carbon dioxide emissions of 7 million tonnes of carbon,higher overall GDP growth, and the net creation of over 100,000 jobs.
Such a tax reform would be employment neutral for energy intensive industries - disproving the myth that energy taxes would drive jobs away from Britain. The big winners would be the health and education sectors - with 40,000 jobs [1].
Tony Juniper, FOE Campaigns and Policy Director said
"We are encouraged by the contents of today's consultation document. Energy taxes are good for jobs, good for the economy and good for the environment. They will create the incentive for industry to stop being wasteful, become more efficient, and ensure that they will be in competitive shape to do business in the 21st century."
[1] The most energy-intensive industrial sectors are 'basic metals', 'non-metallic mineral products', 'other mining', 'water supply' and 'chemicals not otherwise specified'. Under the modelled carbon/nuclear tax which is recycled as NIC cuts, even in these sectors (except'other mining') the incentive to switch away from using energy inputs, which become relatively more expensive, to using labour inputs, which become cheaper, results in an increase in employment as a result of changed investment patterns. From: Cambridge Econometrics for Forum for the Future and Friends of the Earth, Industrial Benefits from Environmental Tax Reform in the UK, 1998.
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