A problem for the Tories at the moment is that they lack a big idea on the economy. This is what enables Brown to unfairly paint them as a ‘do-nothing’ party.
The Tories should take inspiration from Arthur Laffer. Here’s a lightly adapted version of a recent Laffer article, that Osborne should make party policy:
“We need to impose a tax on the thing we want less of (carbon dioxide) and reduce taxes on the things we want more of (income and jobs). A carbon tax would attach the national security and environmental costs to carbon-based fuels like oil, causing the market to recognize the price of these negative externalities. Nuclear power plants would then compete with coal-fired plants. Wind and solar power would have a shot against natural gas. Trains would compete with trucks. We would clean the air, create wealth and jobs through a new technology boom and drastically improve our national security. The market-driven innovation that brought us the Internet and the personal computer could quickly bring us new, cleaner fuels. A carbon tax that was fully offset (with national insurance contributions or income taxes cut by an amount equal to the revenues generated by the new tax) would be as bold as the threat that we face”
A tax shift of this nature would be a ‘big idea’, Brown could no longer accuse the Tories of having no idea what they what do about the economy. It would be conservative in that by cutting income taxes and national insurance contributions it would give people more choice about how they spend their money. It would also spur innovation in Britain. Politically, it would steal some of Lib Dem’s most attractive clothes and it would emphasise that the Conservatives are the party of the future.
With oil prices having fallen so far so fast, there has rarely been a better time to introduce a carbon tax. As long as it made clear that every extra pound of revenue earned will see a reduction in income tax and national insurance then the measure could be popular at the ballot box.
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