Letter from Friends of the Earth to the
PRE-BUDGET STATEMENT 2001
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
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
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
strategynot merely a re-statement of principlesto
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,
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.
3 See memoranda submitted prior to giving evidence. Back