Back to The Undercover Economist homepageIt is always worth scrutinising any government policies for unintended consequences. (I suspect that even politicians do this, but rarely care as long as the headlines sound good.) Alistair Darling’s do-nothing budget will have few consequences, positive or negative.
But I did spot one: the “showroom tax” on less efficient new cars is designed to raise cash and make Darling look green, and it may achieve those aims. But is it good for the planet? That depends on whether it persuades people to buy smaller, more efficient new cars, or whether it persuades people to drive their old, heavily-polluting gas guzzlers around for longer than they otherwise would have done. I have no idea which effect with predominate, and I suspect that Mr Darling doesn’t either.
A tax on a specific type of vehicle is, incidentally, gesture politics. Big cars don’t hurt the planet unless they are driven around; when they are driven around, their drivers pay a high duty on fuel. Trying to reduce emissions by targeting the type of car is a clumsy, round-about way to achieve a sensible goal.
Tim writes about the economics of everyday life. His 