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Environmental Taxation

Volume 450: debated on Thursday 26 October 2006

4. What proportion of tax revenue was represented by environmental taxation (a) in 1997 and (b) in the latest year for which figures are available; and if he will make a statement. (97059)

Revenues from taxes introduced for a specifically environmental purpose amounted to 0.12 per cent. of overall tax revenues in 1997, and that rose to 0.4 per cent. in 2005. The climate change levy has proved particularly effective, delivering more than 28 million tonnes of emissions savings so far.

The Minister’s answer was carefully worded, but I remind him that the proportion of green taxes has fallen from 9.4 per cent. in 1997 to 6.2 per cent. this year. Is that what the Chancellor meant when he said, in this morning’s Financial Times, that he had got the balance about right in the economy? Is the Minister aware that CO2 emissions have gone up in six of the past eight years, and does he not agree that the only solution—

The problem with the hon. Gentleman’s metric is that it measures the wrong thing. That could increase with an increase in pollution, which is a bad thing, not a good thing. We need a balanced package of fiscal measures and trading, and that is what we have delivered. The hon. Gentleman should support the climate change levy, which is a big switch from taxation on employment to taxation on pollution, and delivers 6 million tonnes of carbon savings a year. I hope that he welcomes that.

My right hon. Friend will be aware that green taxation on company cars has resulted in a hugely positive change in behaviour, but will he assure me that he will resist the temptation to make revenue from green taxes central to Government funding, as that would lead to a huge black hole in Government finances if and when behaviour changed?

My hon. Friend is right. The company car tax changes are very important, as they save about a quarter of a million tonnes of carbon a year, which will probably increase to half a million tonnes by the end of the decade and more beyond that date. It is important not to create huge holes in the public finances. For example, abolishing inheritance tax would require an 18p increase in petrol duty. If that is the Opposition’s policy, we should know about it.

According to a poll published this week, only 4 per cent. of the population believe that Labour has made effective progress on climate change; presumably the Chancellor is one of them. Does not the fact that he suddenly mentioned the issue 15 times in his Budget speech, compared with a previous average of one speech reference—

Order. The hon. Gentleman must ask a question. This is a supplementary question; he must not make a long speech.

The question is—because the Chancellor mentioned climate change 15 times this year, but only once the year before—is it not true that he is much more interested in political change than climate change?

The hon. Gentleman had the opportunity to support the climate change levy, which delivers 6 million tonnes of carbon savings a year. Almost uniquely in the world, we will deliver on our Kyoto objectives, and that is the result of the Government’s policies.