We agree entirely, let's abolish subsidies
We have a little and simple test when people start talking about subsidies. If they say that subsidies to fossil fuels are around the $500 billion a year level then we’ll - barring further investigation - assume that their other subsidy numbers are about correct. If they say $5 trillion then we’re going to insist they’re not really talking about subsidies.
The difference is that the $500 billion number is actual subsidies. Governments buying up oil and or gas at one price then selling it to the population at a lower, that sort of thing. This is also something that doesn’t really happen in the rich world. The $5 trillion number includes the idea that everything should pay full VAT, if domestic gas - as in the UK, where the 5% rate applies - doesn’t then that’s a subsidy. Non- or under- taxation from some ethereally perfect rate might not be wise but it’s not really a “subsidy”.
At which point:
The world is spending at least $1.8tn (£1.3tn) every year on subsidies driving the annihilation of wildlife and a rise in global heating, according to a new study, prompting warnings that humanity is financing its own extinction.
Checking the report we see that fossil fuel subsidies are pinned at that $500 billion mark.
Fossil fuels: $640 billion
Well, right order of magnitude at least. So, we’re willing to accept, for the sake of argument at least, that the $1.8 trillion total is talking about actual subsidies. Also, in the footnotes:
The IMF has estimated that fossil fuel subsidies were $5.9 trillion in 2020, but the bulk of that number refers to the cost of selected externalities. The Dasgupta Review (2021) estimated $4-6 trillion for multiple sectors, but this figure includes the IMF estimates and represents subsidies as a whole and did not single out the environmentally harmful component.
A slightly different point from our own but leading to the same conclusion. The IMF judges by that ethereally pure taxation system that includes congestion, carbon, accidents etc all being properly taxed as externalities.
It’s this point that we disagree with:
The authors, who are leading subsidies experts, say a significant portion of the $1.8tn could be repurposed to support policies that are beneficial for nature and a transition to net zero, amid growing political division about the cost of decarbonising the global economy.
No.
We’re entirely willing to agree that such subsidies are a bad idea. OK, so stop paying them. But why not just not collect the money from the people in the first place? Why divert that sum, instead of not feed it into the political process in the first place? For we’ve evidence, pure and simple here, that politics spends such sums the wrong way. So, don’t collect the tax, don’t allow the politicians to spend it and make the world a better place. In both these environmental terms and also leaving near $2 trillion fructifying in the pockets of the populace?
To be possibly crude about it, if politics micturates away 2% of everything on killing off the environment then stop politicians having access to 2% of everything.