Government fails to make green taxes work

16th August 2011

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  • Central government ,
  • Mitigation



The government is missing key opportunities to influence behaviour and deliver better environment protection, because environment taxes are not being managed effectively, says House of Commons Environment Audit Committee (EAC).

In its report examining the 2011 Budget and the government’s approach to environment taxes, the EAC warns that such levies are failing because businesses and the public do not understand them.

To be effective such taxes need to be straightforward, clearly signalling the desired behavioural change, and be demonstrably fair so that momentum can be gained for higher levels of taxation, says the committee. However, it argues that recent Budget decisions have created a perception that environment taxes are “just another means of raising revenue”.

The EAC highlights, in particular, decisions to cut a penny from fuel duty rates and to not create more incentives to change to low-carbon alternatives as missed opportunities to be clearer about the long-term need for sustainable transport.

It is equally critical of proposed changes to air passenger duty, which it says will do nothing to make it a more effective tax, and the government’s definition of subsidy in relation to nuclear development, which it says does not hold up to scrutiny.

The EAC report was followed by figures from the Office for National Statistics revealing that in 2010 green taxes formed a smaller proportion of the overall tax burden than in 2009, despite a government pledge to increase such levies.


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