Daily Archives: 10 September 2023

Fossil Fuel Subsidies Surged to Record $7 Trillion

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https://www.imf.org/en/Blogs/Articles/2023/08/24/fossil-fuel-subsidies-surged-to-record-7-trillion

Scaling back subsidies would reduce air pollution, generate revenue, and make a major contribution to slowing climate change

Coal loader P4393. Part of the coal loading facility at Kooragang Island, NSW Australia. Image by eyeweed, Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0).
Coal loader P4393. Part of the coal loading facility at Kooragang Island, NSW Australia. Image by eyeweed, Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0).

Fossil-fuel subsidies surged to a record $7 trillion last year as governments supported consumers and businesses during the global spike in energy prices caused by Russia’s invasion of Ukraine and the economic recovery from the pandemic.

As the world struggles to restrict global warming to 1.5 degrees Celsius and parts of Asia, Europe and the United States swelter in extreme heat, subsidies for oil, coal and natural gas are costing the equivalent of 7.1 percent of global gross domestic product. That’s more than governments spend annually on education (4.3 percent of global income) and about two thirds of what they spend on healthcare (10.9 percent).

Our findings come as the World Meteorological Organization says July was the hottest month on record, underscoring the urgent need to curb human-induced climate change.

As the Chart of the Week shows, fossil-fuel subsidies rose by $2 trillion over the past two years as explicit subsidies (undercharging for supply costs) more than doubled to $1.3 trillion. That’s according to our new paper, which provides updated estimates across 170 countries of explicit and implicit subsidies (undercharging for environmental costs and forgone consumption taxes). Download detailed data for different countries and fuels here.

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If governments removed explicit subsidies and imposed corrective taxes, fuel prices would increase. This would lead firms and households to consider environmental costs when making consumption and investment decisions. The result would be cutting global carbon-dioxide emissions significantly, cleaner air, less lung and heart disease, and more fiscal space for governments.

We estimate that scrapping explicit and implicit fossil-fuel subsidies would prevent 1.6 million premature deaths annually, raise government revenues by $4.4 trillion, and put emissions on track toward reaching global warming targets. It would also redistribute income as fuel subsidies benefit rich households more than poor ones.

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With global energy prices receding and emissions rising, it’s the right time to phase out explicit and implicit fossil-fuel subsidies, for a healthier and more sustainable planet.

https://www.imf.org/en/Blogs/Articles/2023/08/24/fossil-fuel-subsidies-surged-to-record-7-trillion

Continue ReadingFossil Fuel Subsidies Surged to Record $7 Trillion

The political and economic consequences of Liz Truss

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https://leftfootforward.org/2023/09/the-political-and-economic-consequences-of-liz-truss/

12 months after her shambolic premiership commenced, we look at the lasting impact of our shortest-serving PM’s disastrous attempt to remould Britain into a low tax, deregulated economy.

Lettuce complains about being compared to Liz Truss. The lettuce says "It's bd enough getting compared to a Tory, never mind an imbecile"
Lettuce complains about being compared to Liz Truss.

Liz Truss. A political figure you are probably trying to forget, but a reminder that the short-term actions of politicians can have long-term outcomes. She was the prime minister who started her No 10. tenure on September 6, 2022, and oversaw a catastrophically unfunded, tax-cutting ‘mini’ budget, which cost the country a staggering £30bn. She then set about making a series of screeching U-turns and abandoned her entire policy programme, as she battled to settle the market meltdown and save her own skin.

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One year on after Truss took office and mortgage rates have hit a 15-year high, inflation remains uncomfortably high, and the growth the UK’s shortest-serving PM promised is nowhere to be seen, as millions fret about how they will afford their bills when winter comes.

After criticism that the Tory government was ‘rudderless’ in the face of soaring inflation, Liz Truss promised to make tackling the cost-of-living crisis her number one priority if she became PM. Recession is ‘not inevitable’ she had said as she pushed to stand out in the crowd of hopefuls during last summer’s Tory leadership campaign.

Instead of helping Britons tackle soaring living costs, Truss, together with her chancellor Kwasi Kwarteng, managed to do the exact opposite.

The sweeping tax cuts announced by Kwarteng triggered investor panic over the future health of the UK economy. The mini-budget (called ‘mini’ instead of just ‘budget’ to avoid scrutiny by the Office for Budget Responsibility) prompted a sharp fall in the value of the pound and drove up government borrowing costs.

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https://leftfootforward.org/2023/09/the-political-and-economic-consequences-of-liz-truss/

Continue ReadingThe political and economic consequences of Liz Truss

Calls for Spanish-style ‘solidarity tax’ to come to UK, as majority of public want higher wealth tax

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https://leftfootforward.org/2023/09/calls-for-spanish-style-solidarity-tax-to-come-to-uk-as-majority-of-public-want-higher-wealth-tax/

Potential options for taxing wealth – based on Spain’s model – could raise significant funds for the public purse.

Image of loads of money
Image of loads of money

A new poll has revealed there is widespread support for ensuring the richest in society pay more in taxes in Britain. The survey was commissioned by the Trade Union Congress (TUC), ahead of its annual Congress, which starts in Liverpool this weekend.

The research found that over six in 10 people are calling for the wealthy to pay higher taxes, including over half (53 percent) of Tory voters in 2019. Three in four are also in favour of capital gains to be taxed at either the same rate or higher than income tax. This included 73 percent of Tory 2019 voters. Only 4% of the public think wealthy people should pay less tax, the survey found.

Paul Nowak, general secretary of the TUC, said it is time to “end the grotesque inequality of the Tories,” and that a national conversation about wealth tax needs to be had. The union body added that the Tories have allowed the wealthiest in Britain to “feather their nests” while working people have suffered the worst pay crisis for two centuries.

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https://leftfootforward.org/2023/09/calls-for-spanish-style-solidarity-tax-to-come-to-uk-as-majority-of-public-want-higher-wealth-tax/

Continue ReadingCalls for Spanish-style ‘solidarity tax’ to come to UK, as majority of public want higher wealth tax