Lib Dems outline ideas on environmental taxes

Strong support for the proposed EC carbon/energy tax was voiced in a Green Paper on environmental taxes issued by the Liberal Democrats just before their annual conference in September.1 The party's ideas on energy taxes are clearly differentiated from the Government's plans to impose VAT on domestic energy - notably in committing it to recycle the revenues to curb demand for energy and private transport. But the proposals ran into trouble at the conference over vehicle fuel taxation - ironically the area in which the paper is arguably at its weakest.

The Green Paper came hard on the heels of a wide-ranging policy document, "Facing up to the Future", setting out the Liberal Democrats' vision for the 1990s and beyond and announcing two key principles of the party's taxation policy. These are a shift from taxing income and labour towards taxing pollution and finite raw materials, and a move away from the long-standing Treasury doctrine that revenues from specific taxes must not be "hypothecat

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