Monday, 19 April 1999

How green was the budget?


In the recent budget Friends of the Earth described it as the “first halting steps towards green economics”

The first principle of green economics is to shift the burden of tax from economics 'goods', such as jobs, onto 'bads' such as pollution, waste and inefficient use of energy. However, the Chancellor linked his welcome move to a business energy tax to a 12.5% reduction in greenhouse gas emissions by 2010. This is a retreat from Labour's clear manifesto promise to cut CO2 emissions by 20% over 1990 levels by 2010.

The Budget contained a number of welcome moves including:

A Business Energy Tax: The Chancellor announced a business energy tax, on a “revenue neutral basis”, from the year 2001. Resources will be used in part to cut employers' National Insurance Contributions from 12.2% to 11.7%, which will create jobs. FOE welcomes the £50 million fund for companies to invest in energy efficiency and renewable energy, but believes that this should be targeted at small and medium enterprises.

Landfill Tax: The Chancellor announced increases in the standard rate of landfill tax by £1 a tonne a year, but has yet to extend the tax to cover incineration.

Ending company car tax breaks: The Chancellor announced the end of tax breaks for excessive mileage by 2002, and will vary the tax to encourage smaller, greener company cars. However, FOE has criticised the Chancellor for failing to reduce the total cost to the Exchequer of company car tax exemptions. He will also encourage green commuter schemes, and increase funding for rural buses from £100 million to £120 million.

Differential rates of Vehicle Excise Duty: The VED on small cars will be cut by £55, with cuts in duty on clean lorries and buses by up to £1000. FOE has criticised the Chancellor's failure to increase VED on large “gas guzzlers”.

There has been no progress on pesticide and fertiliser taxes, or a levy on aggregates. FOE also wants to see VAT harmonised between new build and redevelopment, to encourage brown field development.