Archived press release

Carry on consulting. climate change threatens disaster while chancellor gives green tax amber light

3 November 1998

Chancellor of the Exchequer Gordon Brown has announced consultation on Lord Marshall's proposal for an industrial energy tax. A tax of this kind is essential if the UK is to make its contribution to fighting global climate change, and if Labour is to achieve its Election promise of a 20% reduction in carbon dioxide emissions by 2010 over 1990 levels. But Marshall's proposals are facing determined opposition from the CBI, as well as from corporate lobbies including the cement and aluminium industries and the electricity utilities. Resistance is also likely from the Department of Trade and Industry.

Friends of the Earth has welcomed "the belated beginning of wisdom" by the Treasury on an energy tax, although Marshall is proposing a low level and raising the possibility of unacceptable exemptions.FOE also suport reductions in Vehicle Excise Duty for small cars, although VED should also be raised for large gas guzzlers. But key green tax proposals are still missing from the Chancellor's announcement.
.He is not planning further cuts in VAT on energy saving materials
.He is not acting to cut perverse subsidies to fossil fuel industries, including the 1 billion plus exemption from Petroleum Revenue Tax, covering oil exploration
.He has not agreed to hypothecate tax receipts from motorists to provide more public transport and finance road traffic reduction
.He said nothing about either a pesticides or aggregates (quarrying) tax.

Friends of the Earth therefore believes that the pre-Budget package is completely inadequate to meet the challennge of disastrous climate change. The Treasury has still not accepted the key demand of environment tax reformers - to increase taxes on pollution, and cut taxes on labour. FOE research,published in January this year and tested on Cambridge Econometrics' MDM-E3 economic model,shows that reform of this kind could help meet the 20% CO2 cuts target and create up to quarter of a million net new jobs.

Commenting, FOE Executive Director Charles Secrett said:
"For the Chancellor to accept the principle of an energy tax is the belated beginning of environmental wisdom. But it is hard to believe that he is really serious about fighting climate change. Yesterday we heard from Environment Ministers that climate change threatens imminent disaster to the planet. But will Mr Brown and Mr Blair really face down the predictable bleats of protest from energy-inefficient industries over Lord Marshall's proposals, or will they just carry on consulting? Why hasn't the Chancellor cut VAT on energy saving materials? Why hasn't he cut perverse fossil fuel subsidies? It still seems as if Brown is fiddling while the planet burns."

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Published by Friends of the Earth Trust