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I can't say I agree.
While the article echoes what I've said several times in the past about extreme taxation damping the effect of resource price rises, there is another aspect.
As the price of oil rises, certain countries where tax is low (such as the US) will be significantly adversely affected causing demand destruction. This is the flip side of the lack of action to reduce demand over the years. However as the oil price rises it increases the need for the UK government to reduce tax to maintain a working and viable economy that is not in recession. That in turn is needed to take the 'clear and present danger' presented by the demonstration of peak oil and turn it into significant action by the whole economy. Without these cuts in tax the economy grinds to a halt and none of this action takes place, ever.
The government has to have a policy plan for progressively reducing tax on oil to zero over a period of years, coupled with a plan for mass conversion to low oil intensive system-structures.
Now, on the brink of a global recession, is not the time to be adding a straw to the camel's back.
Reducing tax as the oil price rises removes ALL price incentive from the private sector to invest in low consumption technology at the same time as reducing government tax take, and available income for investing in alternative energy infrastructure. Net result, when the tax take falls to zero, the public gets a huge price rise shock that they are even less prepared for, and the government has invested NOTHING towards offsetting it.
What can easily be done by individuals has been done at the current UK tax level. Further action will only be taken in the face of clear immediate threat. The reduction in tax as the price of oil rises swiftly is only to mitigate the immediate effect of those rises - individuals still realise that a) one day it runs out b) others in other parts of the world are really suffering. Thus it acts as an enabler for action with the drive coming from elsewhere.
In essence high tax levels give you two bites of the cherry, they reduce demand early and they sustain investment capability longer - provided you use them right.
I can't say that I agree with you. Higher prices equals more motivation to mitigate and change lifestyles. If the government starts to send the signals that everything will be just OK, cause the gov is backing you up with lowering taxes, it may work out very well for the first years, but then you will end up pretty unprepared for what is to come.
Exactly, where's the thing not to like? We must ALL move out from FFs. The nations that do this first will be more prepared to face the uncoming crisis than the ones which don't.
So it's a matter of sight. If your sight is about 5 years long, tax increase is wrong. If your sight is about 20 years long, tax increase is the right move. It's like chess. What they did was to sacrifice a pawn. Seems stupid, but only to the ones who don't know how to play chess, as in the next 20 moves, it will strike as a brilliant move.
Well it would be, if the sacrifice was harder. Even so, it sends a clear message: you people are on your own, so start mitigating. Start conserving. Stop SUVing. etc. I'm all for it.
Planning horizons for most political, business and individual psyches are about 3 years, with attention falling off markedly after that.
Thus the evidence as seen in others (the US in particular) failing because of ever rising prices will have much more effect than the threat of it in future in some arbitrary future.
The model I've outlined is in effect a smoothing function on the transition between a supply-rich and a supply-constrained world. Less shock, more attenuation of the change to match the rate at which people can adapt. Trying to make the system bend and not break.
The worst thing is if the tax is not reduced at the right time and right amount. Keeping the tax high as oil price rises push it even higher will cripple business and prevent investment in alternatives. As companies go out of business individuals won't be able to afford to invest - and basically the system breaks.