Archived press release

Tax Waste, Not Jobs Says FOE

28 May 1997

At a seminar on green tax reform today [1] - supported by Friends of the Earth - the Chancellor of the Exchequer, Gordon Brown, will be encouraged to use his first Budget to increase employment by shifting taxation away from jobs and towards waste and pollution.Friends of the Earth welcomes the growing consensus for green tax reform and were pleased that the Chancellor - in spelling out Labour's tax principles - stated that Labour would use tax to support Labour Party policies on job creation and waste prevention [2].FOE believes that the Chancellor should introduce the following in his first Budget:

. Tax waste. Increase the landfill tax through a £2 per year escalator and tax incineration [4]. Whilst the majority of tax raised should be offset through reductions in employers National Insurance Contributions [NIC], some of the funds raised should be set aside to support local authority recycling initiatives [5].
. Tax pollution from transport. Raise the road fuel price escalator from 5 per cent to 8 per cent and use the funds to either cut employers NIC or fund investments in public transport [6].
. Tax virgin aggregates. A £1 per tonne tax should be introduced, rising annually to£9 per tonne. This would encourage recycling of aggregates and help protect some of the UKs finest scenery from the pressures of quarrying [7].
. Cut VAT on energy saving materials. By reducing VAT on energy savings materials (currently VAT is 17.5%) the Chancellor would end the perverse situation where energy saving is taxed more heavily than energy consumption (currently taxed at 8 % but planned to be reduced to 5 %.) [8]

Uta Bellion, Policy Director of Friends of the Earth said:
" The Chancellor has a golden opportunity to give an early signal that Labour means business on the environment. He should tax pollution and waste and reduce taxation on jobs. It he does this he will encourage industry to clean-up and help the emerging UK environmental technology sector gain a share of the global $426 billion environmental technology market.[9] "

NOTES TO EDITORS:

[1] IPPR, Green Fiscal Measures, Royal Institute of Chartered Surveyors, 12 George St,Westminster, London. 9.30 am - 5 pm. Friends of the Earth is financially supporting the seminar.

[2] Responsibility in public finance, speech by Gordon Brown, 20th January 1997. Labour Party.

[3] This tax increase could potentially see the landfill tax bringing in £700 million in the first year and potentially over £2.5 billion by 2005.

[4] It has been estimated that the cost of setting up a comprehensive kerbside recycling system in the UK would amount to around £30-111 million. ENDS Report 255, April 1996.

[5] This increase would raise an additional £450 million in the first year, potentially rising to over £6 billion by 2005.

[6] Revenue of £233 million would be collected in the first year, potentially rising to £2.4 billion by 2005.

[7] The implications for this change in Government revenue is complex. The resulting increase in energy efficiency will mean less revenue from VAT on fuel but an increase in sales of energy saving products.

[8] United States Congress Office of Technology Assessment, 1993, Industry, technology and the Environment, competitive challenges and business opportunities, Washington DC,OTA.

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