The Impact Of Green Taxes To Consumers In UK

Green taxes were introduced objectively to tackle environment pollutions. According to Fullerton et al., (2008), taxes on things such as Landfill, industrial energy use (the climate change levy), aggregate levy, motor fuel differentiation, vehicle exercise duty differentiation and the central London congestion charge had either been introduced or reformed in the past 20 years to tackle environmental pollution. These taxes are called Green or Environmental Taxes.
Global warming has brought a big concern for environmental issues in many countries; including U.K. Different studies have suggested the need for swift and urgent actions to alleviate the possible costs of climate change. Introducing taxes so called environmental taxes, changes trade permits and other economic measures might play an important role to achieve cost effective control of greenhouse gas emissions (Stern, 2007)
Figures from Office for National Statistics (ONS) shows that U.K government collected ??41.4billions from environmental taxes in the year 2010 (Office for National Statistics,2011), rising up to 4.8% in comparison to 2009. This implies that environmental tax revenues have increased exponentially year on year basis, causing doubts to consumers’ mind on two aspects. (a) Do environmental taxes benefit the government or consumers?. (b) Are there alternatives to environmental taxes?. In answering the two questions, this report will review the literature of environmental taxes in order to gain an insight on the subject.

2. Literature review
Environmental taxes were introduced in order to improve the environments. Some of these include taxes such as Landfill tax, climate change levy and aggregate levy. No one can underestimate the associated costs with quarrying operations such as noise, dust, loss of amenity and damage to biodiversity. No one can discourage the idea of producing less waste and recover more value from waste through recycling. Thus, green taxes encourage polluters to scale down demands for aggregate and encourage the use of alternative materials (HMRC, 2013).

Having an understanding of environmental tax opportunities in the business and developing communications and collaborations, green tax can bring incentives to consumers. Reviews done by KPMG (2013) encourage companies to put systems in place to monitor Green tax incentives from governments and to engage with the government and industry associations to provide a business review of how green tax implementations can be designed to help consumers. KPMG is one of the top 4 accounting firms advising businesses to adopt environmental policies to attract government incentives, therefore there is a big sign that consumers really benefit from green tax. Similarly, Ekins and Speck (2010) points out that green taxes have increased fuel prices resulting a demand for energy of about 4% and reduction in emissions. As the fall in emissions is relatively larger than the fall in fuel demand, this suggests that tax policies are efficient at reducing emissions. Less emissions means consumers will have healthier lives and live longer. Conversely, (Sinclair, 2011) raised the issue that higher number of jobs are being lost in the process of creating laws and policies to enable firms to adopt climate change procedures to avoid being charged green tax. The loss of jobs not only make the nation shifts from its economic policies, but bring distress to firms, consumers and individuals.

Various studies point out the possible advantages of green taxes. One, efficiency gains through reallocation of abatement, gives environmental taxes to minimize costs as other policy instruments cannot separate between polluters, but environmental taxes can provide each polluter with incentives to reduce emissions with least expensive ways.Two, dynamic innovation incentives. Regulated policies stipulate that polluters should use particular innovations or maintain carbon emissions below a specific limit (EurActiv.com, 2013). However, this does not provide polluters encouragements to make reductions in pollution beyond what the regulations require. On the other hand, environmental taxes provide incentives for polluters to seek ways to reduce emissions. This creates a need to develop new technologies such as 0% C02 emission cars (Hybrid cars) allowing more reduction at a cost below the rate of tax (European Environment Agency, 2011). London Congestion Charge was introduced in order to reduce traffic levels and allow the government to invest in improving transports across London. This has caused motor industry to focus on manufacturing electric cars and cars that emits below 100g/km as these cars are exempted from paying the congestion charge. For the past decade, there has been an increase in demand for cars emitting carbon dioxide below 100g/km, causing the price substances to raise and very much making consumers willing to buy more than producers are willing to sell (O’Sullivan et al., 2009). Commuters are encouraged by transport for London to use buses, tubes, trains or possibly cycle to and from London first to save money due to congestion charge imposed on almost all vehicles emitting above 100g/km, second to save time and third to avoid parking space inconveniences. Electric cars are still a rich product and substitutes for cars just are not efficient. Trains are great for certain journeys and when they can work effectively, they are generally quite well developed already, nevertheless they cannot compete with the flexibility and comfort of cars for journeys (Sinclair, 2011).
All political parties encourage businesses to reduce carbon emissions as there seem to be substantial benefits for businesses making energy saving investments that will reduce their tax bills in the short term and their fuel energy bills over the long term. Kreiser et al. (2012) suggests that there is a need to achieve environmental sustainability by adopting environmentally friendly fashion and produce green products and services. However, doing this requires sacrifice of time, money and other resources. This sacrifice comes from Government, businesses and consumers. But the part doing more and feeling the pains is the consumer side. Recently U.K government has tried to revamp the Green Tax policy, forcing energy companies such as EDF, NPOWER, SSE to rising energy bills, scale back investments and pass on the costs or increase in green taxes to vulnerable customers which will eventually rise the bills by ??110 a year (Mackie, 2013). Significantly, Sinclair (2011) stretched the need for green taxes not to be used as an excuse for rising finance wasteful spending and government revenues as for the most part these taxes are just one more part of the rip-off.

3. Research Design (Methodology)
The research methodology is used to define the plan in which the research will be carried out. As described by Saunders et al. (2012), methodologies will point out the sources in which data will be derived and proposal in which they will be collected and analysed. Furthermore, ethical issues and limitations encountered during research needs to be addressed. A research design specifically covers areas such as research paradigm, type of the research, the nature of the research and time frame.

4. Research philosophy
Paradigm research is a philosophy that is used to describe a cause of action. Paradigm can either be Ontology implying that the reality is known due to experimental evidence and past event, epistemology concerned with how has something been known due to perceptions and axiology which is the judgement about beliefs on particular issues. In this research the paradigm is closer to positivism therefore; the philosophy to be used is epistemology. As previously mentioned that this is a quantitative research, this means as the method of collecting data will be through observatory reality taking the philosophical stance of natural science (Saunders et al., 2012).

5. Nature of Research
There are three different types of research nature studies such as exploratory study, descriptive nature and explanatory study. Due to the nature of the topic, ”the impact of environmental taxes to consumers in U.K”, quantitative research will be undertaken and descriptive study fits in well as it provides an accurate profile of the event (Saunders et al., 2012). As the objective is to find out the impact of green taxes on U.K consumers, figures from consumers can be calculated using statistics elements such as frequencies, mean and confidence interval tables and help in drawing the conclusion on the effect of environmental taxes to U.K consumers.

6. Research Approach
Deductive approach research will be used to make confirmation or conclusion based on the theory. Deductive view starts from theory, goes to hypothesis, observation then confirmation. As it is based on laws, rules and acceptable principles, therefore it will help to test or measure something (Saunders et al., 2012) . An inductive approach research is used to make a general conclusion as it starts from observation, pattern, tentative, hypothesis and then final theory. Since the research is restricted to the impact of environmental taxes on U.K consumers, inductive approach will be inappropriate to use due to the fact that the hypotheses is looks to modify and not to build on the theory.

7. Time Frame
The research focuses on specific periods, therefore, this cross-sectional research approach. Data are collected from various sources over a limited period of time and analysed to make a decision or to judge its relevance. Longitudinal research approach is not limited to a specific time period, thus, it will not help to analyse the topic that exists now. While longitudinal research may have strength to study change and development over the time, however, this research is a snapshot time horizon which will employ questionnaires strategy therefore cross-sectional will be a good time horizon (Saunders et al., 2012).

8. Data collection and Analysis
As previously mentioned that this is quantitative research approach, therefore the best method to collect data is the use of questionnaires. Saunders et al. (2012) states that descriptive research use questionnaires as they help to identify and describe the variables in different phenomena of the research. The particular area to be investigated is on the rising of utility bills on this year compared to 5 years ago so as to find the percentage increase on UK consumers after green tax levy. Statistical tools such as mean, standard deviation and frequency will be used to analyse data and find out exactly the impact of environmental tax to U.K consumers. Well designed and structured questions with aide of survey monkey software (Appendix 1), would be distributed to participants, answers will be collected and with the aid of tables and graph data will be interpreted in order to make a conclusion. Interview and observations are other tools which could be used to collect data, but normally data collected using these methods will be based on qualitative research approaches. Also they will provide explanatory for findings rather than numerical findings.
9. Sampling
The population is a larger group of participants from which samples are selected to perform an experiment. This research is focusing on consumers such as individual household customers, small business, family business and large business. As the consumer’s population is so massive, the research focuses specifically on small and family businesses in East London on the following post codes, E17,E4,E11,E10,E18,E5,E6,E3,E2,E16,E1,E7,E8,E12,E14 and E13.Sampling makes sense because it takes segment of the population being investigated and the selection is based on probability which provides a chance for every element or individual to be selected, non-probability approach would not sit as some elements are more likely to be selected than other (Bryman and Ball,2011).Unlike a census where data are collected in relation to all units in an entire population, this is not feasible due to unavailability of resources such as time and funding.
The sampling technique to be used is simple probability sampling. This method is chosen due to the fact that it guarantees representations and gives each element a chance to be selected with the help of statistics. Simple probability sampling selects samples randomly from the sampling frame using random numbers and tables. Theoretically, simple probability sampling is the best technique to use bearing in mind that this is quantitative research approach, however, due to unavoidable reasons this method will not be used, instead convenience or availability non probability will be applied.

Sample size is determined by applying a statistical formula with 95% of confidence interval at a population 4000 and 5% significance interval participants. In this research, the sample size is set to be 200 participants. According to Saunders et al. (2012), to obtain the high response rate the sample size should be as representative as possible, avoid the chance of being biased and to provide a precise estimate for the selected variables.

10. Limitations and accessibility
The research focuses on the ”Impact of Green Taxes to consumers in U.K”. Potentially two things would hinder this research. One, data to be collected and analysed is secondary data that means some data might be outdated, manipulated and possibly they might have not been verified by the management. This could jeopardize the findings. Second, the research targets consumers who run small businesses and the majority of them work for themselves and are scattered across over the U.K. Though the sample size is selected, but approaching participants while they are doing their work could be interpreted as wasting their productive time and also consumers fear that they would be exposing their personal information such as bills or other liabilities.

11. Ethical issues
As with any research, when dealing with someone’s information, the control on how data are used is governed by the Data Protection Act 2003. Things such as names, address, and age should not be disclosed to the public without authorization (Data Protection Act, 2003)
However, the research would be based on quantitative research approach and only secondary data will be used to draw a conclusion on findings. Therefore, as they are secondary data, then the ethical issue is not a concern

12. Conclusion

Environmental pollution is an issue that all political leaders in the world are worried about. Day in day out a lot of CO2 is emitted globally. To reduce the emissions, U.K government introduced so called ”environmental Taxes” to force polluters pollute less. U.K government benefits from taxes raised by consumers, but overall consumers benefit the most due to following reasons. One innovations, green tax has forced motor industries to produce small cars with less emissions. This helps customers to save on thing such as Insurance, road tax and fuel.

13. References

Bryman, A. and Bell, E. (2011). Business Research Methods. 3rd. New York: Oxford University Press.
DATA PROTECTION ACT. (2003). Data Protection Act 2003. Available at http://www.dataprotection.ie/documents/legal/act2003.pdf [Accessed 20/03/2014]
Ekins, P. and Speck, S. (2010). Competitiveness and Environmental Tax Reform. London: Green Fiscal Commission.
EURACTIV.COM. (2013). Europe agrees new deadline on car emissions limits. Available at http://www.euractiv.com/transport/eu-agrees-new-deadline-car-emiss-news-531983 [Accessed 16/03/ 2014]
EUROPEAN ENVIRONMENT AGENCY (2011). Environmental Tax Reform in Europe: Opportunities for eco-Innovations. Luxembourg: Publication office of the European Union.
Fullerton, D. Leicester, A. and Smith, S. (2008). Environmental Taxes. Oxford: Oxford University Press.
HMRC. (2014). Environmental Taxes. Available at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_ShowContent&propertyType=document&resetCT=true&id=HMCE_PROD_009312 [Accessed 11/03/ 2014]
KPMG. (2013). KPMG Green Tax Index. Available at http://www.kpmg.com/global/en/issuesandinsights/articlespublications/green-tax/pages/default.aspx [Accessed 13/03/2014]
Kreiser, L. Sterling, A. and Herrera, P. (2012). Green Taxation and Environmental Sustainability. Cheltenham: Edward Elgar Publishing Ltd.
Mackie, G. (2013). SSE Promises lower bills if green tax scaled .The Scotsman. Available at http://www.scotsman.com/business/energy/sse-promises-lower-bills-if-green-tax-scaled-back-1-3186358 [Accessed 17/03/2014]
Office for National Statistics. (2011). Environmental Taxes-Tax Revenue up. Available at http://www.ons.gov.uk/ons/rel/environmental/environmental-accounts/2011/environmental-taxes.html [Accessed 05/03/2014]
O’Sullivan, A. Sheffrin, S. and Perez, S. (2009). Survey of Economics. 4th. Boston: Pearson Education Ltd.
Saunders, M. Lewis, P. and Thornhill, A. (2012). Research Methods for Business Students.6th. Harlow: Pearson Education Limited.
Sinclair, M. (2011). Let them Eat Carbon. London: Biteback Publishing Ltd.
Stern, N. (2007). The Economics of Climate Change: The Stern Review. Cambridge: Cambridge University Press.
Transport for London. (2014). Benefits .Available at http://www.tfl.gov.uk/roadusers/congestioncharging/6723.aspx [Accessed 14/03/2014]

Appendix 1

The Impact of Environmental Tax to UK consumers

1. What is the type of your business?
Family Business
Small Business

2. What post code is your business?
E17,E10,E11
E6,E7,E12
E15,E13,E18
E3,E2,E1,E4

3. How much was your utility bills in 2009
??200-300
??300-400
??400-500
??500-700
Above ??700

4. How much increase in your utility bills this year?
0-5%
5-7%
7-10%
10-15%
Above 15%

5. Is the increase due to?
Green Tax
General Increase

6. Has the introduction of green tax affected you?
Yes
No

7. Should the Government abolish Green Taxes?
Yes
No

8. Has it not been green tax, could you utility bills increased in that % you indicated?
Yes
No

*
9. Please provide comments on this research

Please provide comments on this research

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