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Roman Webber, head of Deloitte’s Environmental Taxes Group, comments
“The Chancellor made 'An environmentally sustainable world' a key part
of his 2008 Budget. This is not surprising given the high political
profile of climate change. It is however worth noting that environmental
taxes have actually fallen as a proportion of total tax yield in the
period 1997 to 2006, and many of the measures announced today will not
be immediate.
“The fiscal measures include potential 'plastic bag tax’ from 2009; an
increase in fuel duty at 0.5p per litre over inflation from 2010;
increases in climate change levy, landfill tax and aggregates duty and a
new 'showroom tax' on the sale of new, polluting, cars, with a low rate
for low polluting vehicles.
“The proposed environmental fiscal measures will actually cause the tax
yield to fall in the short term by £575m (primarily due to a deferral of
a 2p fuel duty rise from April to October 2008), although in total the
measures are expected to yield £1.085bn net over 2008-11, primarily due
to vehicle excise duty which accounts for £1.2bn. This is in addition to
other environmental fiscal measures announced since the 2007 Budget
which are expected to yield £0.83bn over the same period. The biggest of
these is the aviation duty which it is intended will replace air
passenger duty by a ‘per plane’ duty from November 2009.
“A ‘plastic bag tax’ is likely to prompt action from retailers and is
already in use in other countries such as Ireland. However, it is not
likely to be without controversy with some claiming that in Ireland it
has actually increased the levels of plastic used.
“A notable highlight of the vehicle excise duty (‘show room tax’), is a
first year charge of £950 from 2010-11 for the most polluting vehicles.
By contrast, there will be a first year zero rate for new cars that emit
130g CO2 per km or less. These changes can be expected to have real
impact on consumer behaviour.
“With the removal of the biofuel duty rate differentials for certain
types of biofuels (a revenue raising measure yielding £550m in 2010-11)
and instead focusing on the Road Transport Fuel Obligation from April
2008, the government is removing support for specific fuels and letting
the market decide which will be a success.
“Overall, it is encouraging to see such a wide range of measures being
taken. There is no single silver bullet that will solve the problem of
climate change and a broad multi level approach is required. However,
the changes fall short of what many have been calling for and appear to
be some distance from the recommendation made in the Stern Review for
taxation to be a key weapon in fighting climate change. A number of the
measures covered in the Budget (such as aviation duty, Climate Change
Levy and landfill tax rate changes) had previously been announced, or
have been deferred (fuel duty rise). There is also no real sign of
hypothecation of the environmental tax revenues for environmental
projects.” |
