Archived press release

Brown breaks promises over green taxes

4 December 2005

Green taxation has fallen under Gordon Brown, despite a pledge in 1997 to shift the burden of taxation from employment and onto environmental pollution [1]. In 1997, green taxes stood at 9.5 per cent of all taxes; but by 2004 it had fallen to just 8.3 per cent [2].

The main reason for the fall in green taxes is because Gordon Brown has frozen rates of road fuel duty and VED in recent years. If he had kept road fuel duty and VED at the same percentage of total tax, then these taxes would have raised £5 billion more in 2004. This tax increase could have been used for a number of purposes such as reducing taxes on employment, or boosting investment in sustainable transport alternatives to motoring. Labour promised to cut traffic on UK roads when it came to power. However, traffic levels are now more than 10 per cent higher than in 1997.

Friends of the Earth's New Economics Coordinator, Simon Bullock, said:

"The Chancellor must use the tax system to help combat climate change. But despite promising to increase green taxes when Labour came to power, they have actually fallen. UK carbon dioxide emissions are soaring. It's time the Treasury played its part in fighting global warming.

"Gordon Brown must put climate change at the heart of his pre-Budget statement on Monday. This would have huge benefits for the environment and economy, and show that the Chancellor is determined to tackle global warming. Action would boost innovation and new technologies, cut our dependence on energy imports and reduce the threat of catastrophic economic costs from climate change".

Carbon dioxide levels have increased since Labour came to power - despite promising to cut it. The Government has pledged to cut emissions by 20 per cent of 1990 by 2010. UK carbon dioxide emissions are less than four per cent lower than 1990 levels.

Friends of the Earth is urging the Government to take action as part of its climate campaign, The Big Ask (www.thebigask.com). Measures that Friends of the Earth is calling on the Chancellor to adopt include:

Road Transport

• Introduce a new zero-rated tax disc for the most-energy efficient cars, and a higher rate for gas-guzzling cars. This measure would encourage motorists to choose more fuel efficient vehicles and reward them for taking action on climate change [2].
• Increase road fuel duty in line with inflation, and explicitly use the revenue raised to improve the quality of public transport alternatives. This would help encourage a shift to less polluting modes of travel.

Buildings

• Reform incentives to promote micro-generation. This would help ensure that buildings start to produce renewable electricity and heat.
• Introduce a Renewable Heat Obligation for energy suppliers. This would help to reduce emissions from heating homes and buildings.

Aviation

• Increase Air Passenger Duty, and remove the exemptions from VAT on domestic flights and on duty-free. This would start to reduce the billions of pounds of tax exemptions the aviation industry receives each year, which has fuelled aviation's emissions growth.

Industry

• Increase the Climate Change Levy. This will drive further improvements from industry.

A full briefing on the measures that Friends of the Earth would like the Chancellor to adopt in the Budget:
www.foe.co.uk/resource/briefings/prebudget_oct_05.pdf (PDF)

Notes

1. National Statistics, Environmental Accounts Autumn 05, table 3.1
www.nationalstatistics.gov.uk/downloads/theme_environment/EANov05.pdf (PDF†)

2. www.hm-treasury.gov.uk/topics/environment/ ¬
topics_environment_policy.cfm

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Published by Friends of the Earth Trust