A raw deal from the Chancellor

An unemployed man who dumped a shed which he had just demolished into a ditch after the trailer on which he was carrying it broke an axle was fined £200 recently for a breach of the waste licensing laws. Another gentleman who knew perfectly well that he was acting illegally because he had already been prosecuted for a similar offence was fined £350 around the same time for bringing 100 tonnes of hazardous chemical and asbestos waste onto an unlicensed site a few yards from an infants school. An innate sense of fair play would drive most people to recognise that justice was not done in one or both of these cases, and to support a review of the Government's sentencing guidelines. The Chancellor, who was recently forced to call on the public purse to assist him with his legal fees in connection with the eviction of an undesirable tenant, should know what it means to be short of a bob or two. There was, however, a certain lack of clarity in his assurances that the social security benefits of those on low incomes will be uprated to take account of his Budget announcement that VAT will be imposed on domestic fuel and power from next April. Many pensioners and others on income support, as well as those on incomes just above the income support threshold, pay four times as much of their incomes on fuel as those towards the top of the income ladder. Expecting these groups to pay a new tax on energy without compensating them in full through the social security system bears the stamp of a Government which knows little and cares less about the fortunes of the country's poorest citizens. The row provoked by the Government's characteristically inept handling of its decision to impose VAT on domestic energy may have unfortunate consequences for its environmental policy as well. Together with the Chancellor's announcement that road fuel duty will rise by at least 3% per year in real terms in the coming years, the move on VAT marks the first serious application of economic instruments to achieve environmental objectives in the UK. Yet there has been no suggestion either with these measures or with other new instruments under consideration on waste and water and air pollution that the Government is prepared to see any of the revenues being recycled to bolster their incentive effect. In contrast, the European Commission's proposals for a carbon/energy tax - so disdained by the Chancellor in his Budget speech - at least have the merit of providing for incentives to be offered for investments in energy efficiency. Likewise, many of the pollution charging schemes in various continental European countries put the revenues to use in investment subsidies where they are most likely to achieve environmental benefits. But simply slapping extra pollution charges and taxes on businesses and households is a very quick way of getting economic instruments a bad name.

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