18. The assessment of the environmental measures
in the Financial Statement and Budget Report (Table 5.3) was a
very welcome innovation supplying more information about the environmental
impact of budgetary measures than has ever been available before.
Whilst in terms of our ideal, defined in the First Report, the
Table falls somewhat short, we welcome the initiative and the
intention of Treasury to "review the form of the environmental
assessment...to build on the approach set out in Table 5.3 in
time to inform future Budgets" and that "the Government
is actively reviewing the existing tax system".
19. There are a number of
ways in which this initial approach might be built on in the first
instance:
(i) Although we await Government strategies
for climate change, air quality, integrated transport and sustainable
development, it would be helpful if any quantified assessment
could be placed in the context of overall targets or desirable
standards as these emerge.
(ii) The main assumptions behind these estimates
of environmental impact could helpfully be included (perhaps in
an annex) or supplied separately as a matter of course to this
Committee.
(iii) Some discussion of options such as
higher or lower rates might be helpful. The Financial Secretary
told the Environment, Transport and Regional Affairs Committee:
"There are decisions that need to be taken about
the interplay between equity, economic objectives, environmental
objectives and competitive objectives. This Government has put
environment in that equation. By laying bare the arguments we
will be attempting to lay bare what the trade-offs are...the balancing
of those objectives."[13]
For instance some indication might have been included
of what the economic, environmental and distributional impacts
would be of rates for the fuel duty escalator between the pre-existing
5 per cent and the 9 per cent recommended by the Royal Commission
on Environmental Pollution and others. This would make clear the
balance that was being struck between these factors by Government
at 6 per cent, thus implementing the approach described by the
Financial Secretary.
(iv) It is difficult to see the utility
of including consultation exercises. These certainly deserve mention
elsewhere in the text and an indication of their potential significance
in the context of the problem to be addressed. But their prospective
environmental impact should not be claimed alongside measures
for inclusion in the Finance Bill.
(v) The 1998 assessment says that "non-inclusion
will generally reflect that environmental impacts...are considered
to be small" but some inclusions were also rated as having
"negligible" or "small" impacts. Measures
considered for their environmental impact should all be listed
for the purposes of completeness and consistency.
20. A distinct but related issue is the wider context
in which environmental taxes are intended to achieve their objectives.
Taxes are often introduced as part of a package of other measures
intended to support or direct the taxes' effects, or to ameliorate
distributional or competitive concerns. Where directly related
measures have a quantifiable effect, up or down, on the impact
of an environmental tax, this should be shown in the assessment.
Any complementary measures, and their objectives, should be described
either in the FSBR itself or in departmental publications accompanying
Budget announcements.
