Select Committee on Environmental Audit Second Report


Memorandum from Royal Society for the Protection of Birds (RSPB)


  The RSPB supports the process of environmental tax reform as set out in the Government's Statement of Intent in 1997. we welcome the new measures announced in the Pre-Budget Report. However, we are concerned that the process of environmental tax reform has stalled. We make the following observations:

    —  The environmental tax reform agenda disappointingly stalled during 2000.

    —  The Government appears to have lost sight of the 'polluter pays' principle in its willingness to address the concerns of interest groups over new tax proposals.

    —  Environmental taxes should primarily seek behavioural change rather than acting as revenue-raising mechanisms for environmental or other objections per se.

    —  The Government must reinvigorate the process of environmental tax reform—this will require leadership from government and environmental NGOs alike.


  The RSPB has broadly supported the process of environmental taxation reform to date. We welcomed improvements to the Landfill Tax and many areas of vehicle taxation, the introduction of both the Climate Change Levy and the Aggregates Levy and the launch of incentives schemes such as the Green Fuels Challenge and the Green Technology Challenge. We recognise that considerable progress has been made in the face of sometimes strong opposition, most notably in the case of the Climate Change Levy. However, we are now concerned that the process of environmental tax reform is stalling. The points that follow should be set against our broad satisfaction and optimism for the process of environmental tax reform.


  Although the Government has made considerable progress in advancing previously proposed measures, the three-year process of environmental taxation reform disappointingly appeared to draw to a sudden halt in 2000. The Government has launched initiatives, such as the Green Challenges, since the Pre-Budget Report 2000. However, there are no current plans for either substantive, new environmental taxes or necessary alterations to existing taxes. These include agricultural taxes (on pesticides and possibly fertilisers) and further improvements to the VED system and waste taxation. Those major measures being portrayed by the Government as evidence of current progress were initiated several years ago. In particular, and whilst reservedly accepting the substitute voluntary approach, the RSPB is disappointed by the Government's refusal to introduce a tax on pesticides, contrary to the Environmental Audit Committee's recommendation for such a levy.

  The Green Challenges, whilst necessary and welcome, are limited in their magnitude and outreach. Whilst the Government has portrayed these initiatives as environmental taxation, they are, in essence, simple subsidies. They represent a marked departure from the mainstream and effective process of shifting the burden of taxation from "goods" to "bads" that has seen such great success in delivering environmental goals in the UK and the EU alike. The same caveats apply to the ten welcome new environmental measures announced in the 2001 Pre-Budget Report.


  The process of environmental tax reform requires careful balancing of the interests of many—often opposing—constituencies. The criteria for managing this process are clearly spelt out in the Government's guidelines for "good" environmental taxation. It is inevitable that every proposal for further environmental tax reform will meet with opposition from vested interests. Even the most carefully-designed, revenue-neutral green tax will produce winners and losers. However, this is precisely the purpose of environmental taxation—and the aim of the "polluter pays" principle.

  The RSPB believes that the Government has, in many recent cases, undermined the "polluter pays" principle and been over-sensitive to opposition from vested interests. For example, the proposed tax on pesticides faltered due to excessive caution over the perceived implications for farmers. The Climate Change Levy will deliver lower reductions in greenhouse gas emissions to compensate energy-intensive industrial sectors. The Aggregates Levy already appears to be at risk of dilution from the Government's apparent weakening in the face of pressure from UK quarrying companies. The fuel protests of September 2000 undoubtedly offered further succour to those opposed to green taxation. Despite the clear difference between fuel taxation and well-designed environmental levies, this episode clearly weakened the Government's resolve to proceed further with the environmental tax agenda.


  Environmental taxes should seek to change behaviour rather than provide hypothecated funding for environmental objectives. The original aim of reform—shifting the burden of taxations from "goods" (such as labour) to environmental "bads" (such as pollution)—remains the goal of today's proponents of environmental tax reform. The RSPB would like the Government to continue to pursue this objective.

  Revenue-neutral taxes, such as the Landfill Tax, Climate Change Levy and Aggregates Levy are broadly designed to achieve this objective, and, if advocated correctly, will meet with greater approval than revenue-raising taxes (such as road fuel duty). Whilst many environmental objectives clearly do require greater funding, securing this funding from environmental taxation serves only to blur objectives and raise opposition to otherwise acceptable measures.

  There are some cases where environmental taxes need to be accompanied by other measures to promote behavioural change. This is true for pesticides, where demand is relatively inelastic, and measures such as advice and incentives could positively reinforce the effects of a tax. Environmental funding should be secured from other sources and met by direct Government spending. The RSPB sees a greater role for the Comprehensive Spending Review in this process—in this respect, the Treasury's request for all Government Departments to issue a statement on the implications for sustainable development of their bid under Spending Round 2000 is very welcome.


  Following the fuel protests, the benefits of environmental tax reform need to be much better communicated to the public; environmental NGOs such as the RSPB should share the responsibility for this. The fuel protests marked a nadir in this process, and both Government and NGOs must share the burden of reinvigorating the case for green taxation. Amongst the NGOs, the RSPB was in the vanguard of putting the environmental case for fuel taxation at the time of the protests, but found itself pitted against a media that was focusing on the adversarial nature of the crisis.

  This process is markedly easier when tax design is aligned with fiscal objectives—these should be both clear and sincere. If an environmental tax is designed as such then the Government has a responsibility to portray it this way. Conversely, if it is designed to raise revenue for other purposes, then this should be clearly stated. These commonsense guidelines were clearly not adhered to during the petrol crisis.

  The Government should not hesitate to laud the praises of well-designed, genuine and thorough environmental taxation. The RSPB will do all it can to communicate this message—however, ultimately the job of leadership must rest with government.

November 2001

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 12 February 2002