Aid charities: Tax the rich to save the world
The wealthiest Scots must pay higher taxes to help tackle the climate crisis, according to a landmark report.
Research by Stop Climate Chaos Scotland – a coalition of more than 60 leading charities and aid organisations including Oxfam, the Church of Scotland, Amnesty International and Sciaf – concludes the better-off must pay more if Scotland is to hit emission targets while helping developing countries cope with the impact of climate change.
The 133-page report to be launched on Wednesday comes amid a new focus on tax rates for the highest earners after Chancellor Kwasi Kwarteng proposed cutting the top rate, one of a package of uncosted changes that led to the pound plunging and causing panic among pension funds and mortgage providers.
The report’s author, Dr Richard Dixon, a former director of Friends of the Earth Scotland and WWF Scotland, concludes Scotland needs to spend substantially more on tackling climate change if it is to meet zero emissions targets. Highlighting research showing higher earners have bigger carbon footprints, he said they must pay more tax to help fund the fight to slow emissions and curb climate change. He said: “Scotland has already made higher earners pay more than in England and Wales but our top rates of tax are still low compared to countries like Denmark and Sweden, and thresholds are set so that they apply to only a small fraction of the population.”
Meanwhile, he said, wealth should also be targeted, adding: “Many of the richest households have an abundance of assets and money but not much taxable income so a wealth tax is a critical tool to redistribute assets in support of climate justice, with the wealthy paying more.
“It would also be a driver of land reform and narrowing economic inequality. The range of potential taxes on wealth include taxes on total wealth, capital gains, inheritance, gifts, land and property, or other types of assets.”
The report, which the Scottish Government is promising to consider carefully, also calls for the UK Government to remove tax subsidies on the North Sea oil and gas industry and use the extra cash to fight climate change. Industries which rely on coal, oil or gas should also face extra taxes under the doctrine of “make polluters pay”. Dixon said: “It would seem obvious that the first thing to do in trying to reduce emissions is to stop subsidising the things that increase emissions. The UK’s domestic fossil fuel subsidies are estimated at £13.6 billion a year, most of this as tax reductions.
“The result is that the UK has one of the lowest effective tax rates on offshore oil and gas profits in the world, with the Treasury receiving less than $2 a barrel in 2019 compared to nearly $22 for every barrel in Norway.
“This subsidy massively undermines the UK’s stated goals on climate change.”
Dixon added: “Scotland needs to fund faster climate emissions reductions at home and make a fair contribution to international climate finance, as well as to compensate those facing irreversible losses and
damages. This will need more public funds, from existing sources and fiscal measures, driven by the principles of making the highest polluters pay the most and protecting the worst off.
Dixon said that previous research suggested Scotland, like other countries, needed to spend about 2% of its GDP – around £3.4bn a year – on tackling climate change.
However, he said, the 2022-23 Scottish Budget lists commitments relating to climate change as totalling £2.86bn – far short of the 2% target.
His report says some measures will be both green and help tackle the cost of living crisis, including grants or loans to make all homes zero-emission and free public transport for all.
Richer countries must also do far more to help developing nations, who have not done as much to cause climate change but are suffering some of the worst impacts. Last year Scotland became the first country in the world to set up a loss and damage fund. Nicola Sturgeon will host the government’s international conference on loss and damage in Edinburgh next month.
The report comes on the eve of Cop27 in Egypt, where low-income and climate vulnerable countries will push for increased financial support from wealthier, high-polluting nations.
The call comes amid increasingly frequent and severe extreme weather events, including drought and floods in East Africa and Pakistan that have affected 33 million people and created financial losses estimated to be more than £40bn. Today, in a special report, The Sunday Post charts how climate change is blamed for worsening droughts in Kenya.
Losses and damages include loss of life, loss of land, loss of income, loss of traditional knowledge and culture, or loss of personal possessions from floods, droughts, storms, or processes such as desertification, sea-level rises or the spread of tropical diseases.
Dixon said: “As well as tripling the value of the Climate Justice Fund, the Scottish Government announced at Cop26 in Glasgow that part of the existing fund would be dedicated to addressing loss and damage, to help communities to ‘repair and rebuild from climate-related events, such as flooding and wildfires’.
“There is an opportunity for the Scottish Government to build on its loss and damage commitment and show further leadership here by identifying new and innovative sources of finance in Scotland.”
Mike Robinson, chair of Stop Climate Chaos Scotland, said: “If we are serious about tackling the climate emergency, we must use our tax and spend powers to drive faster change, while increasing the finance available.
“All countries, particularly rich, industrialised ones, like Scotland, share this challenge, and we must act sooner rather than later.
Professor Saleemul Huq, the director of the International Centre for Climate Change and Development in Bangladesh, said: “Scotland showed climate leadership at Cop26 on addressing climate-induced loss and damage and I urge it to now bolster this example by showing it is also prepared to make polluters pay for the damage they are causing.
“All rich, high-polluting countries must generate the finance needed to slash their emissions much more quickly – but that’s no longer enough: too many lives are already being lost and homes destroyed by this climate crisis.
“The task ahead may seem hard but identifying new sources of finance in climate just ways is essential and, by taking this step, Scotland can show it stands in solidarity with communities suffering from rich countries’ emissions.”
The Scottish Government said the report would be studied when released: “Scotland is determined to play its part as a good global citizen and we will consider this report from Stop Climate Chaos Scotland carefully.
“We agree that one of the injustices of climate change is that the people least responsible for the climate crisis are often the ones suffering its first, and worst, consequences.
“We look forward to driving further ambition for practical action to address loss and damage through our conference in Edinburgh next month.”