Time for a Green Book

The fine details of how policy initiatives are presented are generally more telling than a government's grandest assertions. One such assertion was made by the Treasury on 2 July when it claimed that "today's Budget places the environment at the core of the Government's objectives for the tax system." The Treasury was not slow to claim either that the modest increase in road fuel duty announced by the Chancellor would make a significant contribution - subsequently quantified by Customs & Excise - to meeting the Government's target for reducing carbon dioxide emissions. But nowhere - not in the Chancellor's Budget statement, nor in any press release, nor even in the environment section of the Red Book which amplifies on the Budget statement - was there even a passing word about the environmental consequences of the reduction in VAT on domestic energy or the abolition of the gas levy. The omission was scarcely surprising, as the Government would have been forced to own up that the effects of these two measures on CO2 emissions will offset those of the increase in road fuel duty for at least a year or two.

To be sure, the statement of intent on environmental taxation issued by the Treasury, though hedged about with the usual qualifications, is not to be disregarded. Cobbled together though it may have been in an attempt to cover the Government's blushes over a Budget which was thin indeed on environmental initiatives compared to all the pre-Budget hype, it is nevertheless the Treasury's firmest commitment yet to begin the long process of green tax reform.

Neither in the statement of intent nor in any other material issued by the Treasury at Budget time, however, was there anything to suggest that it perceives its role in advancing environmental protection as anything other than a greening of the fiscal policy fringes. There may be a tax on aggregates and a new system of water pollution charges; there will doubtless be an increase in the rates of landfill tax; there may be a long overdue equalisation of the rates of VAT on energy sales and energy-saving products; and there will probably be some badly needed reforms of vehicle and company car taxation. Such measures would not be sneezed at - but they are not at the heart of economic policy.

A mechanism for getting the Treasury to think about the environmental implications of all its policies was put forward unsuccessfully in the House of Commons seven years ago in the form of a duty on the Chancellor to prepare an environmental assessment of each clause of the annual Finance Bill. Such a duty, its proponent suggested, "would provide a powerful incentive for the Chancellor to sit down and think carefully when drawing up his Budget in respect not only of the fiscal stance that he intended to take or the amount that he wanted to raise, but the environmental consequences of his actions." The speaker was Chris Smith, then a Labour Treasury spokesman and now a Cabinet Minister - and the proposal was subsequently transmuted into a Labour commitment to publish an annual Green Book to accompany the Red Book. For a Government which has promised to put the environment at the heart of its policies, the time is now right for that commitment to be honoured.

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