Terra Infirma - Environmental and Sustainability Consultants

News & Views From the Front Line

Friday, 5 December 2008

Another Perverse Incentive

A perverse incentive is an economic driver that encourages 'bad' behaviour. Examples in the sustainability field include the lack of tax on airline fuel (how do you think those cheap flights are so cheap?), the lack of VAT on building materials for new build when you pay VAT for refurbishment materials and the fact that, despite all the belly aching from the trucking industry, lorries do not pay road tax commensurate with the damage they cause.

Well, when I had to adjust the VAT rate on the Green Business Bible on Monday, it struck me as odd that ebooks are regarded as 'software' by Her Majesty's Revenue and Customs and thus attract VAT when paper books don't.

Ebooks are eco-friendly, books require trees, pulping, glue, distribution, waste. It's perverse...

Labels: economics, perverse incentives