Polluting necessity

Does it pay to make a virtue out of necessity? It is an ingrained behavioural trait, even if somewhat opportunistic, at times hypocritical. Must it be an integral part of political behaviour as well? Not really. Politics should be about gaining credibility through convincing with the truth. Should be, but far too often is not.

Does it pay politicians to ignore that prescription of their art - being honest about what they say - and to act as if inspired by somewhere on high when their back is to the wall? I wonder.

Take the so-called eco-contribution as an example. The measure had been announced in the budget speech for 2004. As is usual in making that statement of policy intent against a background of revenue and expenditure forecasts, the most mere of outlines was suggested, left to be filled in with concrete proposals in due course.

That due course arrived last week, half way through the budget year. It was not that the administration had slumbered deeply over the budget signal. Behind the scenes, a fair amount of work and some consultation was carried out. Few, however, anticipated the sweep of the measure that was eventually produced out of the exchequer's hat.

The polluter pays principle, nodded to in the Labour budgets for 1997 and 1998, is clear in what it means, and says what it means clearly enough. If one pollutes, one pays for the action, whether it is avoidable or not. One cannot completely avoid dispersing some dust when transporting stone from a quarry to a building site. According to the polluter pays principle, one still should pay for the damage caused to society through the negative externalities of the unavoidable side-effects of the necessary action.

The transporter includes the charge in his rate to the contractor, who passes it on to the consumer of his services. The consumer thereby compensates society for the negatives it suffers through the satisfaction of his demand.

Any polluter pays charge (call it PPC) imposed by the government of the day is, technically, a tax - in the same manner that social security contributions are defined as a tax. Both reduce disposable income. But PPC should not be just another tax to satisfy the inescapable need for revenue.

Governments usually deploy the polluter pays principle to discourage pollution and to encourage alternative ways of consumption that do not cause negative externalities through pollution. In part, that is what the government professes to be doing through the eco-contribution proposals. Some of them are a genuine attempt to discourage consumption that pollutes - by pointing out that one would not pay the "contribution" if one utilised non- or less-polluting alternatives, such as rechargeable batteries. But the measure goes well beyond that objective.

All too clearly, a government strapped for cash, anxious to identify new sources of revenue, in parallel with its declared intention to cut public expenditure and to collect due revenue more efficiently, is making a virtue out of that necessity.

There is indeed a dire necessity to increase revenue, in parallel with an imperative to spend wisely, so blatantly and frequently ignored, as in the case of the incredible Lm9 million outlay on a premises for an embassy in Brussels. There is certainly virtue in discouraging pollution. The extensive sweep of the eco-tax scramble those two eggs, with hash on the side. In the process the administration has stunted the infant (in Malta) polluter pays principle.

It has also lost another opportunity to tell it to the people as it really is: You have to compensate the rest of society if you pollute. We have to buckle down to harder measures if we are to bring all that is in our power to bear on controlling the structural deficit.

Instead, it is acting in a manner guaranteed to attract widespread and abiding resistance, not just the usual knee-jerk reaction. For it is not just that people do not like paying taxes, however necessary the outlays they finance thereby might be. People do not like being taken for a ride, either.

Moreover, to make little of the fact that the Lm4 million to be collected annually through the forced eco-contribution by saying, as the Prime Minister did, that the impact effect on the retail-price-index will be "only" 0.84 (under one) per cent, is very weak spin indeed. Another example that the PM is not being well advised about how to tell it to the people.

The best way to do so, surely, is to tell it as it really is.

The government must have more revenue - even if it does finally get down to cutting unnecessary expenditure. It has to find new ways of raising it.

The real virtue in defining and implementing that necessity lies in being honest about it rather than adding further pollution to the political debate by discharging more old spin.