TaxPersonal TaxGreen taxes limited

Green taxes limited

Environmental tax hikes in the Budget are expected to be moderate rather than steep, to avoid 'difficulties'. Jonah Bloom reports.

Radical green taxes look set to take a back seat in the March Budget,her than steep, to avoid ‘difficulties’

despite claims this week that a package of environmental measures could create 400,000 extra jobs by 2010.

A study from Cambridge Econometrics, published on Monday by Forum for the Future, claimed a green tax package would save the Treasury #27bn by 2010.

The study suggested the savings would enable the government to cut employers’ national insurance cont-ributions by 3%, creating 249,000 jobs by 2005, and 391,000 by 2010.

The measures proposed in the study include: annual rises in energy taxes on each barrel of oil or equivalent, an annual increase in landfill tax, a tax on waste incine-ration and quarrying, as well as increases in petrol duty and a complete reform of company car tax.

But tax experts told Accountancy Age they were expecting only limited increases in existing green taxes, rather than any radical new measures.

Peter Wyman, head of tax at Coopers & Lybrand, said: ‘I’m sure there will be a nod in the direction of green taxes – a tax on land development, for example – but it’s unlikely there will be many new measures because they trigger too many difficulties.’

Tony Lynne, indirect tax specialist at KPMG, did not think the chancellor would go for any form of energy tax: ‘It’s too fundamental to change it,’ he said. But he thought there may be an increase in landfill tax and company car tax.

‘They might tell us what they plan to do- perhaps a working party or a consultation paper,’ said Steve James, indirect tax specialist at Arthur Anderson. ‘But I’d be surprised if the Treasury has had enough time to come up with entirely new green taxes,’ he said.

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