Archived press release

Budget 2004 - "brown must go green"

14 March 2004

Friends of the Earth is calling on the Chancellor to tackle global warming and reduce pollution in this year's Budget by offering a sensible alternatives to indiscriminate taxation on employers and individuals. These include:

• 400m: 5 increase Air Passenger Duty (APD) on outward flights from the UK

• 1 billion: Increase tax disc to 500 on the most polluting cars

• 30 billion: Increase Road Fuel Duty to keep the cost of motoring constant

• 130m: Pesticides tax encouraging reduction & support sustainable farming

• End of incineration subsidies and tax introduced to encourage recycling

Friends of the Earth's Environmental Taxation expert Henry Tidy said:

"The Government promised to put environmental issues at the heart of Government policy but has failed to deliver. Green taxes encourage good practice and discourage bad and are essential if the Government is going to support sustainable development. It's time for Mr Brown to go green."

Details of recommendations

• 400 MILLION - INCREASE AIR PASSENGER DUTY ON FLIGHTS ABROAD FROM UK

Why needed - The Government estimates that the cost of climate change emissions from flying amounts to 1.4 billion per year, though research shows that the real figure may be much higher. Air Passenger Duty currently raises 800m - increasing it by 5 per flight leaving the UK would raise and extra 400m that could be put into high speed rail, bus networks and safe routes to school and encourage the public to consider more environmentally friendly forms of travel.

Background: The aviation industry causes enormous environmental damage but receives around 9 billion in tax breaks and subsidies each year. Unlike private car drivers, it does not pay VAT on fuel or new aircraft. This has led to cheap flights, and rapid increase in demand, and calls for more runways - which the Government agreed to last year. APD should eventually be replaced by a more effective environmental charge, developed at European and/or International level.

• 1 BILLION - INCREASE ROAD TAX (VEHICLE EXCISE DUTY)TO REFLECTCAR EMISSIONS

Why needed -Road transport is a major source of emissions of carbon dioxide, the main gas causing climate change. Increasing the tax disc to 500 on the most polluting cars gives drivers a clear incentive to purchase more efficient models. Recent Government research shows that this would prompt 72 per cent of car buyers to choose a vehicle with lower emissions.

Vehicles used for work (such as farmers) should remain in a lower tax band.

Background: Road tax has been a cut for cleaner models but the Government hasn't tackled the most polluting cars reflected in the recent boom in gas guzzlers - the sale of 4x4s has risen by 18% in 2003 whist sales of the most efficient models are down by 11%. This is undermining Government targets for reducing carbon dioxide emissions - the principle climate changing pollutant.

Currently drivers of the most polluting car available in Britain (the Ferrari 456M GTA 2+2) pay the same road tax as the driver of a family car such as the Ford Focus 1.8i estate, despite fact that the Ferrari produces over three times as much pollution. The Ferrari is seven times more polluting than Britain's least polluting car, the Honda Insight, but Ferrari owners are only charged three times as much road tax

The table shows how a system might look and how much money it could raise, based on engine size for older cars and emissions for those registered since 1^st March 2001.

The bands used for this table are merely indicative of the numbers of various vehicles by engine size.
Extrapolated from Department for Transport road vehicle statistics, 2001.

• 30.2 BN OVER 10 YEARS- INCREASE IN ROAD FUEL DUTY

Why needed: An increase road fuel duty by 3-5 % per year (keeping the real price of motoring constant over the next 10 years) would reduce congestion and air pollution, and slow the rise in carbon dioxide emissions. It could raise up to 30.2 bn over 10 years, which should be reinvested in sustainable transport.

Background:Following protests from lorry drivers and pressure from the oil industry, the Government ended the fuel duty escalator in November 1999. Since then motoring costs have fallen by RPI -3% per annum. At the same time carbon dioxide emissions have increased, traffic levels rising and rail fares have gone up.

• 130 MILLION A YEAR - TAX ON PESTICIDE PRODUCTS

Why needed: A banded tax on pesticides would discourage use of pesticides causing problems including high toxicity and soil mobility. It could fund a free independent sustainable farming advisory service and research into non-chemical means of pest and disease control.

Background:Pesticides are toxic chemicals designed to kill pests but can also have adverse impacts on human health and the environment, and impose substantial costs on society. Removing pesticides from drinking water is estimated to cost the taxpayer or consumer (post privatisation) more than 100 million a year.

The pesticide industry's voluntary initiative to cut the environmental impacts of pesticides has made little progress. Other EU countries with stronger policies have had more success. Sweden saw a 60% cut in active pesticide ingredients sold 1991-95, and a further 60% reduction between 1996 and 2000.

• INCINERATOR TAX TO ENCOURAGE RECYCLING

Why needed: Recycling should be subsidised by the Government, incineration taxed fairly and its current subsidies removed.

Background: The UK has one of the worst recycling rates in the EU yet Government backs incineration through tax breaks and subsidies on the grounds that it is energy efficient - effectively giving 11 for each tonne of waste burnt.

Incineration pollutes the environment, contributes to climate change and burns resources that could be reused if recycled.

If recycling was subsidised in the same ways as incineration it would be given up to 50 a tonne as it is significantly more energy efficient than incineration. This would be worth 296-370 million a year to the recycling industry

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Published by Friends of the Earth Trust