Archived press release

First steps from grey brown's green baby

9 March 1999

The first principle of green economics is to shift the burden of tax from economics 'goods',such as jobs, onto 'bads' such as pollution, waste and inefficient use of energy. However,the Chancellor linked his welcome move to a business energy tax to a 12.5% reduction in greenhouse gas emissions by 2010. This is a retreat from Labour's clear manifesto promise to cut CO2 emissions by 20% over 1990 levels by 2010.

The Budget contained a number of welcome moves including:

. A Business Energy Tax
The Chancellor announced a business energy tax, on a “revenue neutral basis”, from the year 2001. Resources will be used in part to cut employers' National Insurance Contributions from 12.2% to 11.7%, which will create jobs. FOE welcomes the £50 million fund for companies to invest in energy efficiency and renewable energy, but believes that this should be targetted at small and medium enterprises.

. Landfill Tax
The Chancellor announced increases in the standard rate of landfill tax by £1 a tonne a year, but has yet to extend the tax to cover incineration.

. Ending company car tax breaks
The Chancellor announced the end of tax breaks for excessive mileage by 2002, and will vary the tax to encourage smaller, greener company cars. However, FOE has criticised the Chancellor for failing to reduce the total cost to the Exchequer of company car tax exemptions. He will also encourage green commuter schemes, and increase funding for rural buses from £100 million to £120 million.

. Differential rates of Vehicle Excise Duty
The VED on small cars will be cut by £55, with cuts in duty on clean lorries and buses by up to £1000. FOE has criticised the Chancellor's failure to increase VED on large “gas guzzlers”.

There has been no progress on pesticide and fertiliser taxes, or a levy on aggregates. FOE

also wants to see VAT harmonised between new build and redevelopment, to encourage brownfield development.

Detailed plans for green taxation, including the measures set out by Gordon Brown today,have been set out in successive Budget submissions from Friends of the Earth, including the 1998 “Blueprint for a Green Budget”. We estimate that Budget measures designed to meet the Government's own target on CO2 emissions (a 20% reduction over 1990 levels by 2010) could create up to quarter of million net new jobs.

Commenting, FOE Executive Director Charles Secrett said:
“This Budget represents the Government's first halting steps towards green economics. We take a parental pride in this infant's tentative but exciting progress.For the first time we have a clear pledge on an Industrial Energy Tax, and a date when it will be introduced. We also have some welcome moves on landfill taxes, on ending tax breaks on company cars and on cutting VED on small cars. Of course,the Treasury need to go much further. There must be a clear pledge that new tax revenues will be spent on cutting National Insurance Contributions and supporting sustainable development. But it is a pleasure to be able to announce that after a troubled birth and disappointing early years, the Government is finally toddling in the right direction”

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Published by Friends of the Earth Trust