Britain Eyes Raft of Green Taxes - Newspaper
Date: 30-Oct-06
Country: UK
Author: David Clarke
Britain's Mail on Sunday published a letter written by Environment Minister David Miliband to Finance Minister Gordon Brown earlier this month detailing proposals to change people's behaviour by making them pay for polluting.
"Market-based instruments, including taxes, need to play a substantial role. As our understanding of climate change increases it is clear that more needs to be done," Miliband said in the letter, according to the Mail.
Miliband acknowledged in an interview on Sunday that a document had been leaked. But he declined to comment on specific measures in the letter, saying government discussions ahead of a mini-budget due by December were continuing.
"What I can say though is the following: that for 150 years we have pumped carbon into the atmosphere whether through energy or transport, as if it had no price. But in fact it has an environmental price," he told Sky News television.
The leak comes the day before the British government publishes a ground-breaking report on the costs of climate change by its chief economist Nicholas Stern.
The report, according to a summary obtained by Reuters, concludes that ignoring climate change could lead to economic upheaval on the scale of the 1930s Depression.
It says the benefits of steps to tackle climate change would greatly outweigh the economic costs and that a global carbon price was needed to affix a clear cost to pollution.
In his letter to Brown, Miliband says "a substantial increase" in tax on higher-emission vehicles should be considered, as well as charging road users for the full environmental impact of their journeys.
"This would encourage a shift away from private to public transport," he is quoted as saying.
Miliband also proposes raising 400 million pounds from charging air passengers an extra 5 pounds per flight and for putting value-added tax on all flights to EU countries.
"Aviation fuel is untaxed, air travel is lightly taxed. We cannot leave it untouched," he says in the letter.
He says a 1999 freeze on automatic rises in duty on petrol, should be removed and that a new mechanism should be considered to keep petrol prices high at the pumps by raising fuel duty if the oil price drops significantly.
Miliband also wants to steer consumers towards buying goods that are more environmentally friendly, rather than items that are not cost effective or energy efficient.
"We need to address this market failure through a system of product charges, fiscal instruments and non-tax alternatives, in particular consumer electronics and lighting," the memo says.