15 April 2005
The Treasury's policy on environmental taxation is 'inconsistent and fundamentally flawed', MPs claimed this week.
Members of the Commons' environmental audit select committee have called for a new fiscal strategy after the general election. They want natural resources taxed in the same way as labour and capital. They also argued for the Treasury to be responsible for co-ordinating carbon reduction strategies across all departments.
Amid concern that the environment has fallen down the political agenda, the MPs called on ministers to establish a Cabinet committee for climate change, and to place responsibility for energy policy into one department.
If policies are not revamped, the government's 'vaunted commitment to the environment will lose all credibility', said the committee.
In 1997, the Treasury issued a 'polluter pays charter' when it set out its Statement of intent on environmental taxation. This committed the government to 'exploring the scope for using the tax system to deliver environmental objectives'.
However, the committee, chaired by the Conservatives' Peter Ainsworth, said that in percentage terms tax revenues were at their lowest level since 1994.
Figures in the report, Pre-Budget 2004 and Budget 2005: tax, appraisal and the environment, show the amount collected in environmental taxes by the Treasury has grown in the past 11 years. However, the percentage levied, including air passenger duties and landfill taxes, had fallen.
In 1994, the Treasury took £21.8bn in environmental taxation — 9.3% of total taxes and social contributions. By 2003, the total was £33.6bn — equal to 8.6%.
The high point in the past few years was 1999. Taxes raised were £32.6m, but this was the equivalent of 9.8% of total taxes.
The committee said: 'This demonstrates the failure of the Treasury to carry through the visionary objective it adopted in the 1997 Statement of intent on environmental taxation.
'Indeed, in relation to environmental measures, budgets since 2000 have contained substantially more subsidies and tax giveaways than taxes and charges.'
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