Green tax revenues plummets by £2bn

Green tax revenues plummets by £2bn

Environmental levies take a severe hit after criteria shift by government department

Revenue figures from green taxes have been dramatically cut, prompting the
shadow chancellor to question the government’s dedication to combating climate
change.

The £2bn adjustment was seized upon by George Osborne after official figures
were released yesterday. Osborne believed the data revealed a serious policy
shortcoming because pollution taxes had taken a backseat while taxes on income
and profits had risen.

‘These figures highlight how Gordon Brown is taxing all the wrong things,’ he
told the FT. ‘This is exactly the wrong response to the challenges of
climate change and global competition.’

When Labour came to power in 1997, the Treasury issued a promise to shift the
burden of taxation from ‘goods’ to ‘bads’, but a new classification of
environmental taxes adopted by the Office for National Statistics (ONS)
wiped the £2bn of revenue from the £34.9bn of green taxes collected in 2004.

ONS took steps to bring its definition of environmental tax into line with
international criteria, which required VAT on petrol duty to be excluded from
the green tax tally.

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