UK transport taxes not ‘environmental’, rules Treasury

Posted at July 18, 2012 » By : » Categories : News » Comments Off on UK transport taxes not ‘environmental’, rules Treasury

The UK government’s definition of environmental taxes published yesterday does not include any transport-related taxes on vehicles, fuel or air travel.

The new definition published by the Treasury yesterday instead focuses on taxes that are explicitly linked to environmental objectives, specifically encourage environmental positive behaviour change or are levied to increase the more environmentally detrimental the behaviour.

That means that vehicle excise duty, fuel duty or air passenger duty do not qualify as environmental taxes while the climate change levy, EU Emissions Trading System (EU ETS), Carbon Reduction Commitment (CRC) energy efficiency scheme, carbon price support, aggregates levy and landfill tax do.

“[The] announcement is an important step in meeting the government’s commitments on environmental tax, and our broader determination to be the greenest government ever,” commented Economic Secretary to the Treasury Chloe Smith. “We want a clear approach that delivers a positive environmental impact without adding burdens onto business or households.”

The Coalition has promised to come up with a new definition of environmental taxes to enable measurement of progress against its pledge to increase the proportion of revenue from this source.

“By setting out a clear, usable definition of what a green tax actually is, people will be able to judge us against the Coalition Agreement pledge,” says Smith.

According to forecasts from the independent Office of Budget Responsibility, the proportion of revenue from environmental taxes will double by 2015-2016.

The breakdown of the figures reveals that the major increases will come from the EU ETS, the CRC and the carbon floor price, which together will increase from current levels of £1 billion in 2011/2012 to £3.9 billion by 2015/2016.

But despite the increase, environmental taxes will still make up only 1% of total tax receipts in the UK.

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Related stories:
CBI calls on UK government to review green taxes (18-Jun)
UK to allow small emitters to opt out of emissions trading (28-May)
Cutting environmental red tape stalling green economy, UK warned (21-May)
UK Chancellor’s 2012 Budget boosts fossil fuels (22-Mar)

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