New inquiry: Budget 2011 and environmental taxes

The Committee will examine how well green taxes are being used to deliver environmental goals and aid the transition to a low carbon economy, and whether Budget 2011 strikes the right balance between these aims and broader economic objectives. The Committee also wishes to examine sustainable development and environmental protection aspects of ‘The Plan for Growth’ published alongside the budget.

This inquiry follows on from a series of annual inquiries on the Pre-Budget Report and the environment in the previous Parliament.

The Committee is interested in receiving written evidence that looks at the following themes of the inquiry:

• Whether Budget 2011 furthers the Government’s green objectives, including the impact of the cut in fuel duty on greenhouse gas emissions and air pollution;
• Approaches to shifting the burden of taxation from ‘goods’ (e.g. labour) to ‘bads’ (e.g. emissions) and factors that need to be considered when designing and introducing green taxes;
• The scope for the tax system to create a ‘modal shift’ from high carbon transportation to low carbon alternatives, including Fuel Duty, Vehicle Excise Duty, and Air Passenger Duty and issues the Government should consider when developing strategies for sustainable aviation and motoring;
• The scope for the taxation system to protect and increase stocks of natural capital and the possible role of proposed ‘natural accounts’;
• The impact of the taxation system in general on sustainable development;
• How policy proposals in ‘The Plan for Growth’ will affect sustainable development and environmental protection (i.e. planning, green growth, low carbon investment, regulations etc); and
• The announcement in Budget 2011 on the Green Investment Bank.

The Committee invites organisations and members of the public to submit written evidence, setting out their views on these issues. More wide ranging responses are also welcome. Submissions should ideally be sent to the Committee by 20 April 2011, although later submissions may be accepted. Guidance on preparing submissions is set out below.

Background

There is no single definition of what a green or environmental tax is, but they are generally considered to be taxes which have been designed specifically to meet environmental aim; taxes that have been restructured to reflect environmental objectives; or taxes not specifically introduced for environmental reasons, but have an environmental impact.

Environmental taxes, as classified in the UK Environmental Accounts: Fuel duty, VAT on Fuel duty, Renewable energy obligations, Climate change levy, Vehicle excise duty, Air passenger duty, Landfill tax, and Aggregates levy. 7.4% of all taxation revenues collected in 2007 were from environmental taxes (mostly from Fuel duty and VAT on fuel). Environmental taxation as a proportion of GDP has fallen from 3.5% in 1998 to 2.7% in 2007.

The Coalition agreement set out the Government’s overall approach to taxation for this Parliament: “the Government believes that the tax system needs to be reformed to make it more competitive, simpler, greener and fairer. We need to take action to ensure that the tax framework better reflects the values of this Government.” (HM Government, The Coalition: our programme for government, May 2010). It has adopted the previous Government’s policy aim of shifting the burden of taxation from ‘goods’ (such as employment) to ‘bads’ (such as pollution).

On 30 March 2011 the Department for Transport published “Developing a sustainable framework for UK aviation: scoping document”.

For written submissions to the Committee, please note:

Each submission should ideally:

• Begin with a short summary in bullet point form;
• Have numbered paragraphs; and
• Be in Word format with as little use of colour or logos as possible.

A copy of the submission should be sent by e-mail to eacom@parliament.uk and marked ‘Green taxes’. An additional paper copy should be sent to:

Clerk of the Committee
Environmental Audit Committee
House of Commons
7 Millbank
London SW1P 3JA

It would be helpful, for Data Protection purposes, if individuals submitting written evidence send their contact details separately in a covering letter. You should be aware that there may be circumstances in which the House of Commons will be required to communicate information to third parties on request, in order to comply with its obligations under the Freedom of Information Act 2000.

Guide for written submissions to Select Committees