Taxing Attitudes

A while back it was reported in the Irish Times that the ESRI urges less spending, more taxes. Now I know what you are thinking: an economic policy unit coming out in favour of new taxes must have hit their heads. But no, they were not talking about raising tax for equality or other such stuff; they were calling for a raising of taxes in an effect to change people’s behaviour. But does it actually work?

One of their calls was for increased tolling on the nation’s roads. The reason being that it would reduce the demands on the nation’s roads and help reduce the congestion. But the line that I picked up on is:

The Government will have to introduce measures to change how citizens use infrastructure being built under national development plans,

There are two ways in which the government controls what people can do: either through the law or through taxation. I think everyone will agree that the laws are what is there to allow a coherent society function, be they smoking bans in pubs, age of sexual consent, etc. But what of the government trying to change the attitudes of people on matters that the government does not deem important enough to legislate against?

Changing people’s opinions on something is not as simple as “slapp a tax on and it will change people”. The classic example is the plastic bag levy. By putting a 15 cent tax on a plastic bag, people started carrying their groceries without plastic bags and began to realise if you buy a paper and a bottle of coke, what do you need a bag for? Overnight, the plastic bag consumption in Ireland dropped. People also started carrying bags with them—sometimes eco-friendly bags, other times plastic—and re-used them over and over again. The change was remarkable and all for a tax of 15 cent. But the times are changing and there is much talk of the need to up the tax as it is losing its effect. But the financial aspect of the tax was never the cause of the change: the cause of the change was the fact that people were forced to think about the plastic bag. Previously it was a kind of instinctual thing to get a plastic bag. The effect of the tax was to make you stop and think about what you were doing. When you stopped to think about it, you realised that you didn’t need the bag anyway. Hence why it worked.

However now the plastic bag tax has come part of everyday life, people are used to it and instinctually hand over money for the bag. If this value is increased by a small amount then the tax is not breaking the mindset of people. The value at which the tax changes to a small amount to a amount that makes people change their minds is subjective to the person. To some people, 50c would be make them change, for others a euro would be the required amount. When the tax was introduced, the change from 0c to 15c was an infinite increase in the value of the bags and a similar increase in the physiological impact. While an increase of 15c to 30c. Is only double and the impact on people’s actions is little.

So what of attempts to alter people’s perceptions? For instance, Branedy’s suggestion that scientists get tax free status:

If Ireland can support the Arts and Music with a tax free environment, but is now worried about Science, Mathematics and Research. Why not grant the same favor to Scientists, Mathematicians and Researchers? Since there are fewer Scientists, and Mathematicians, than there are Artists and musicians, and in generally they make less money, and hence pay less taxes anyway, why not support them, and make it entirely free of taxation.

Now, being a physicist, I think it is a great idea. But what of the idea? There is much talk about the country’s need for more scientists and that the wages are not decent enough to encourage kids to take up science in University. And this would have the effect of changing people attitudes towards science. Wven if the wages did not match that of the other industries, the effect would be similar to the plastic bag tax. The attitude would be changed even if the financial situation changed little. People would perceive themselves as being better off. Perception is everything.

Now I know I have rambled on a bit here and if you are still reading this then sorry for making you think that maybe I have a great point somewhere . I don’t really. Just that if the government want to use tax as a method to alter people perceptions on living in the countryside, plastic bags, science SUVs, etc., it is not the financial aspect of the tax that has the biggest effect, it is the physiological effect of a person being forced to change their daily routine. Simply increasing tolls will not do this. Varying tolls however where the toll rate changes during the course of the day can have this effect because it will force people to consider their journey and think “do I really need to travel at 5pm when I can travel at 6pm for free?” So far only the Greens have picked this up.