President Macron needs to win the war on fuel tax. Every country does. It is an issue on which the governments in Paris and Nairobi have been forced to make U-turns. It is rising up the political agenda in other countries, including the UK and Germany, where the rebirth of the Greens and the rise of the rightwing AfD has paralysed the Bundestag.
Without some kind of resolution to how much consumers and business pay for burning fossil fuels – a deal that most agree gets near being fair and addresses the problem of climate change – the battle will not be fought politely inside parliamentary debating chambers, but on the streets.
We’ve seen the debate taken to the boulevards in France and are starting to see it in the UK, following the bridge blockades and street protests favoured by the militant green group Extinction Rebellion.
ER, which is only six months old, is building towards a week of international civil disobedience in April.
The Dutch activist Sjoerd de Koning described finding out about the organisation almost as a religious experience. “We saw what was going on in London and thought this is what we have been looking for a long time – peaceful civil disobedience targeted at politicians,” he said. “There is a lot of energy in this movement and it’s global.”
On the other side are the forces of conservatism, clinging to the combustion engine and the blast furnace. They are equally happy to take to the streets and demonstrate their anger.
What is an elected politician to do? Simply slapping fuel taxes on diesel and petrol won’t work. Fuel taxes are regressive, like any sales tax, and affect the poorest the most. It is people in the bottom half of the income scale who pay a greater proportion of their wages in fuel and so would pay a greater proportion of any fuel tax.
Sadly, all carbon taxes ultimately raise the price of using fossil fuels and the things that are made by burning them. And while the objective of any tax might be to encourage the use of renewables, that can mean a costly upfront investment, especially for an individual household.
What is needed (to help the poor hapless politician) is for the major international agencies to devise tax schemes that win over even the most ardent fan of the combustion engine to the cause of higher taxes on petrol and diesel.
It’s a mission that the International Monetary Fund and the Organisation for Economic Cooperation and Development should devote themselves to, and quickly. These organisations are still widely respected and influential, especially with an ageing and conservative audience that clings to the old ways of doing things.
Both organisations backed austerity in the wake of the financial crash, claiming it was needed to support growth, to the cheers of conservative voters who didn’t want to support giving extra funds – through their taxes – for public investment and welfare spending.
A switch of emphasis, to show how a better tax regime – a greener tax system – could avoid the regressive impact of fuel tax rises, might mean their supporters take notice while their reputations would be enhanced with critics in the green/leftist camp who see them as little more than vehicles for free-market doctrines.
The OECD has spent much of the year documenting the shocking lack of carbon taxes, especially among the 34 members in its club.
It says that in 2015, excluding road transport, 81% of emissions were untaxed. Of those that were taxed, most faced a timid tariff that barely punished the fuel user.
The biggest emitters are the major steelmakers, smelters and energy firms and the OECD says we should tax them, but seems unable to provide a framework that offsets the costs on the poorest.
The IMF has an even worse record. The Kenyan government is currently struggling to survive, according to some reports, after it agreed to an IMF loan that came with several strings attached, one of which was a steep rise in fuel duty.
Indonesia, which hosted the last IMF annual meeting in October, is busy backing away from further planned rises in fuel duties and back in 2012 the Nigerian government abandoned ending subsidies when confronted by rioting in Lagos.
Maybe any effort to rope the IMF and OECD into formulating a progressive green tax scheme for each of its members is doomed to fail. But when individual governments have shown they cannot win the argument, it will take supranational bodies to provide the heavy lifting.
