Select Committee on Environmental Audit Minutes of Evidence


Letter from Friends of the Earth to the Committee


  In our view, the government has reached a critical point in its attempts to "put environmental concerns" at the heart of fiscal policy, and to shift the burden of taxation away from jobs and work and onto pollution and the waste of natural resources.

  We strongly support this administration's priority to modernise industry by building up a low carbon economy and by greatly increasing the efficiencies with which natural resources and raw materials are used in business. "Polluter-pays" taxation, re-spending revenues and investments in environmental services such as energy conservation and waste minimisation programmes, and extending tax credits and capital allowances for cutting-edge environmental technology development and use are essential policy instruments to meet these broad objectives across a range of economic sectors.

  Since the over-hyped and greatly exaggerated "fuel protests", unjustified industry attacks on the Climate Levy and the recent prevarication over the introduction of a pesticides tax, the implementation of the Treasury's welcome Statement of Intent on Environmental Taxation (1997) has lost a lot of momentum. Labour's 2001 manifesto commitment on environmental taxation was significantly weaker than in 1997. In our view, there is now a serious question mark over the government's continued resolve to deliver this vital reform agenda.

  The first Pre-Budget Statement of the new administration provides the Chancellor with the perfect opportunity to reaffirm the government's commitment to continuing to shift taxation away from environmentally virtuous companies, technologies and products and onto polluting and resource wasteful technologies, products and behaviour. Friends of the Earth respectfully urges that the Chancellor produce a revitalised and strengthened Statement of Intent on Environmental Taxation, which is a clear and forward-looking strategy—not merely a re-statement of principles—to realise the increased employment, cost-efficiency and competitive benefits of greening fiscal policy.

  In an important pre-Election speech, the Prime Minister pledged to create a low carbon, low waste economy, and to green the agriculture sector and Common Agricultural Policy. These pledges are now manifesto commitments, which we strongly endorse. But they can only be realised with supportive and carefully designed fiscal packages, including pollution/waste taxes and revenue-re-spend on appropriate tax incentives and public spending.

  I have enclosed a copy of FOE's latest annual briefing for the Pre-Budget Statement,[3] which recommends how this can be done. We hope you find it interesting and useful, and can recommend such an approach to the Chancellor for his Budget 2002.

Charles Secrett


November 2001

3   See memoranda submitted prior to giving evidence. Back

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Prepared 11 December 2001