Health, environmental and other “remedial” taxes

What’s the problem we’re trying to fix?

Big corporations are making huge profits from harmful activities, and communities are paying the cost to repair the damage done to our people and planet.

How do remedial taxes work?

Remedial taxes increase the cost of harmful activities to corporate producers and individual consumers to:

• encourage positive changes in behaviour because harmful products become more expensive to produce, raising prices and reducing demand
• ensure producers and consumers pay the true cost of their activities to society
• raise funds to help remedy some of the harm done

Tobacco, alcohol and sugar taxes, waste disposal levies, and excess/windfall profits taxes and capital gains taxes (discussed above) can all fall under the remedial tax umbrella. 

Why would remedial taxes make things better?

Remedial taxes don’t have to raise a lot of money to be worthwhile if they change behaviours to improve our health or environment, and save us money in the long-run.

The revenue raised can be tagged to particular spending (“hypothecated”) that addresses the underlying harm. In some instances they can achieve multiple purposes, for example road and fuel taxes support the maintenance of roading infrastructure, but can also encourage public transport use, cycling and walking - which have environmental and health benefits.

But remedial taxes can have a disproportionate impact on those least able to pay, so the design of such taxes must address this issue. We should pair remedial taxes with measures to support changes in behaviour and address the impact on the least well-off. For example:

• Grants to switch to green energy solutions if we tax oil and gas
• Quit-smoking services if we tax tobacco
• Affordable and accessible public transport when we tax roads and petrol