Environmentally Friendly Projects

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 9th July 1992.

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Photo of Martyn Jones Martyn Jones , Clwyd South West 12:00 am, 9th July 1992

To ask the Chancellor of the Exchequer what plans he has to use tax incentives to encourage companies to invest in environmentally friendly projects.

Photo of Stephen Dorrell Stephen Dorrell The Financial Secretary to the Treasury

The existing tax regime already gives relief for capital investment by companies on machinery and plant or industrial buildings, including investments in environ-mentally friendly projects.

Photo of Martyn Jones Martyn Jones , Clwyd South West

In the light of what the Prime Minister said 12 months ago at Olympia about energy efficiency and promoting measures to help that, is it not about time that the Chancellor did a little more about that and did something useful, through the tax system, to promote energy efficiency? As a start, perhaps we could get rid of VAT on energy-efficient products.

Photo of Stephen Dorrell Stephen Dorrell The Financial Secretary to the Treasury

It is interesting that the hon. Gentleman concentrates on energy efficiency, because that is a good example of an environmentally friendly investment which any company can make and which is justified by the costs that are saved by saving that energy. Saving energy is not only green but saves costs. It does not need a tax incentive to justify that.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

Is it not eloquent testimony to the lack of interest in putting the environment at the heart of economic policy that not a single Conservative Member has risen on this question to participate? The Government, for all their fine words, have done precious little to include environmental concerns in their taxation policies. There have been no differentials on VAT, no real incentives for industry and no action on vehicle excise duty. There is an existing green agenda in which the Government should be interested—why are they not?

Photo of Stephen Dorrell Stephen Dorrell The Financial Secretary to the Treasury

It is eloquent testimony to the fact that the Labour party is uninterested in reducing tax rates that right through the passage of this year's Finance Bill a range of alternatives for tax allowances—for example, against corporation tax—were pressed on us. The only way to pay for all those proposals, had we accepted them, would have been by raising the marginal rate of corporation tax and making this country uncompetitive with other developed countries.