Tuesday, March 11, 2008

UK Budget 2008: Green or just taxing?

The 2008 Budget is out tomorrow and the prospects of green tax hikes are about as popular with the right as they are with me. The problem seems to be that the government cant stand raising the main taxes so they go after alternative revenue streams from a variety of sources. This is quite a contrast to the idea of keeping the budget under control and then reshaping it to reflect priorities. If the government cynically exploit the label green then they will damage the true idea in the process.

Some good green taxes would include:
  • A tax on aviation fuel, putting it in line with petrol, the hypothication of this towards our rail services would make it a real green tax.
  • An across the board carbon tax at the level of fuel purchase. Reductions in council tax or the rate for the lowest income tax band would make this a popular scheme.
  • A differentiation of vehicle excise duty (VED) so that those with highest mileage are free and those with the lowest mileage are really expensive range £0-3000 per year.
  • A vehicle sales charge on polluting vehicles, the revenue from which is used to subsidies less polluting vehicles.
Some measures deal with green issues without tax:
  • A free energy audit and installation of draft stripping, insulation and other air tightness measures. Offered as an alternative to winter fuel payments which require funding every year due to poor building stock.
  • No new roads. Funding for roads diverted to cycling, walking and public transport schemes.

What do the papers have to say?

The Telegraph states that the widely anticipated rise if fuel tax may not materialise due to high oil prices.

"Alistair Darling does want to send out a signal that fuel use needs to be cut
and people have to pay for the environmental damage. However, previous fuel duty
rises have been delayed."

The Guardian points out that a forecourt fee is likely to be introduced for the most polluting vehicles.

"The chancellor will present a report on "decarbonising road transport" prepared
for the Treasury by Professor Julia King which recommends measures such as a
"showroom tax" on the most gas-guzzling cars to discourage consumers from buying
them. The £2,000 figure being speculated on at the weekend is thought to be on
the high side, however."

The Daily Mail points out in a surprisingly sane and analytical article that the charge for gas-guzzlers will apply to band G vehicles. I would be interested in the average cost of a band G vehicle and how a relatively small charge will effect purchases. It is also noted that a tax break for clean cars is expected. A tax on aviation based on flights not people is expected; this tweak acts as a motivator to full planes.

"Buyers of new 'gas-guzzlers' in car tax band G - including Range Rovers and
other 4x4s - will be hit with a first-year charge of more than £1,000 in vehicle
excise tax, before it reverts to the current level of £400. Drivers with green
cars will see their tax bill fall."

New aviation taxes will encourage fuller flights and we could well see green
rules covering the sale of commercial property.

The Daily Record points out that Darling is likely to get publicity by announcing significant increases in winter fuel allowances: an awful move people need warmth not fuel.

The Tories say he will unveil a headline-grabbing rise in the winter fuel
allowance for pensioners.

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