PBR in depth: Green Budget not so green

Link: Pre-Budget special report

In his pre-Budget speech chancellor Gordon Brown introduced new taxes and tax breaks aimed at helping the environment and making people and companies account for their actions.

In 1999 the government announced that the standard rate of landfill tax, covering active waste, would be increased by £1 per tonne each year until 2004/05. New pre-Budget measures will now see the landfill tax rate increase by £3 per tonne per year from 2005/06 until the government reaches its medium-to long-term target of £35 per tonne. Current landfill tax rates stand at £13 per tonne.

On the side of rewarding good environmental practice, the government is to introduce a new fuel tax rate for bioethanol, a cleaner form of petrol, which will be 20 pence lower than the current rate for Ultra Low Sulphur Petrol.

Further research is also underway to modernise the way road haulage is taxed, with a second progress report into a distance-based lorry road-user charge due early next year. The government is also to introduce the Air Transport White Paper next year, which will propose economic instruments aimed at encouraging aviation companies to take account of the effects they have on global warming, air quality and noise pollution.

John Whiting, tax partner at PricewaterhouseCoopers, said: ‘It’s a cautious step and I was really expecting a bit more in terms of environmental issues, but at least it is on the agenda and they are talking about it. I think the government is still looking for the tax equivalent of the philosopher’s stone, the big thing that will bring in a lot of money, help the environment and be popular. Maybe they can’t find it because it wasn’t in this report.’

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