COMMONS

Budget 2011 and Environmental Taxes

06 February 2012

Government  still unable  to say what counts as 'Environmental Taxes'. The Environmental Audit Committee is today publishing the Government’s Response to the Committee’s report on Budget 2011 and Environmental Taxes.

The Response comes nearly seven months after the original report, but is incomplete. The Response does not address the first four recommendations from the Committee, on the need for and content of an environmental taxation strategy and how environmental taxes should be defined. The Committee's July 2011 Report noted that the Treasury's provisional definition, by excluding Fuel Duty and Air Passenger Duty, differed from that used by the Office for National Statistics.

Joan Walley, Chair of the Committee said:

"The Government has taken nearly seven months to respond to our report, which is an unacceptable delay. It is also unacceptable, after such a long interval, to provide an incomplete Response, which does not address our pivotal recommendation for clarity about what constitutes an ‘environmental tax’ and the need for an environmental taxation strategy.

Such a strategy is vital to bring clarity about what constitutes an environmental tax, the effect the tax seeks to bring about and its rationale, how the Government will deliver an increasing proportion of environmental taxation, and how the revenues compare against the environmental harm they seek to tackle.

Our inquiry last year showed that the Treasury was undermining public trust in green taxes by appearing to use them as a revenue raising tool rather than a serious attempt to change environmentally damaging behaviour. While we continue to wait for an environmental tax strategy, people will not be able to have confidence in the Government’s tax motives."

The Response takes issue with whether Fuel Duty and Air Passenger Duty should be regarded as 'environmental taxes', but does not address the first four recommendations from the Committee on how environmental taxes should be defined and the need for and content of an environmental taxation strategy.

When the Committee took evidence last week (1 February) from Chloe Smith MP, Treasury Economic Secretary, she told the Committee that work was still continuing on a definition.

The Response also takes issue with whether the Government’s electricity market reforms should differentiate between nuclear and renewable electricity generation.

The Committee will return to the issues when it undertakes a follow on report on Budget 2012.

Further Information

The uncorrected transcript of the hearing on 1 February is also available at:

Image: PA 

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