Clause 23

Part of Finance (No. 3) Bill – in a Public Bill Committee at 9:15 am on 19th May 2011.

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Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury) 9:15 am, 19th May 2011

I agree entirely with my hon. Friend. If the Government want to be the greenest Government ever, it is important that green thinking pervades all the work that they do. It is important, therefore, that, when looking at issues such as air passenger duty and fuel duty, at least consideration is given to the impact not only on individual behaviour but on how, as a country, we can help meet our targets for reducing emissions.

As I said, the Chartered Institute of Taxation says that there should be a broader definition of environmental taxes than that apparently implied by the Economic Secretary when she responded to the written question from the hon. Member for Denton and Reddish. In the Budget report, air passenger duty is included under the environmental taxes heading—it was not mentioned in the Economic Secretary’s answer—but fuel duty is not. I would appreciate some clarity on that.

The institute says that if changes to fuel duty are included in the definition of environmental taxes, they are in fact being cut every year to the end of the forecast period. Does the Minister agree that a key aim of fuel duty is to encourage more efficient use of fuel, and the use of public transport for environmental reasons? Does that not qualify it as an environmental tax?

In a separate paper in February this year, the Chartered Institute of Taxation also called for greater clarity on the principles that would guide the Government on green taxation. It does not believe that an entirely new set of principles needs to be developed, but it would like the general principles of good taxation, such as fairness, certainty and minimising the compliance burden, to be modified and applied to environmental taxes. The institute has called for a statement of those principles to be included in tax legislation, and has said that it would welcome a document from the Government along the same lines as the document on corporation tax.

I want to put the clause into the context of the Government’s wider programme on green taxation and the environment. In February, the Department for Environment, Food and Rural Affairs published its vision for sustainable development. According to the document—“Mainstreaming Sustainable Development” —the Government want sustainable development to become central to the policy of all Departments, and not to be seen as a niche issue for one Department. However, a report for Friends of the Earth has recently pointed out that the Treasury is by far the most important Department in terms of delivering green goals, and at the moment it does not seem to have taken that vision on board. The report charted the Government’s progress  on its green objectives, and found that on most of them it had stalled, or little progress had been made. It agreed with the Chartered Institute of Taxation that there was no clarity on how the Government would deliver their coalition agreement promise of increasing green taxation as a proportion of overall tax take. It also said that if fuel duty was considered to be an environmental tax, it would be difficult for the Government to achieve that promise.

Yesterday, the Secretary of State for Energy and Climate Change set out the carbon emissions targets for industry, but without concrete measures from the Treasury those targets will not be reached. Have the Government considered producing a road-map document for environmental taxes, given their coalition agreement objective? Are they committed to providing clarity and predictability for businesses on green taxation, given the aims set out in their new tax policy-making framework last year? What is their assessment of progress towards the coalition agreement’s aim to raise environmental taxes as a proportion of tax revenue, given the changes made in this Finance Bill?