APPENDIX II
ENVIRONMENTAL
TAXATION — STATEMENT OF INTENT
1. The Government's central economic objectives are
the promotion of high and sustainable levels of growth and high
levels of employment. By that we mean that growth must be both
stable and environmentally sustainable. Quality of growth matters;
not just quantity.
2. Delivering sustainable growth is a task that falls
across government. It will be a core feature of economic policy
under this administration. The Treasury is committed to that goal.
3. How and what governments tax sends clear signals
about the economic activities they believe should be encouraged
or discouraged, and the values they wish to entrench in society.
Just as work should be encouraged through the tax system, environmental
pollution should be discouraged.
4. To that end, the Government will explore the scope
for using the tax system to deliver environmental objectives as
one instrument, in combination with others like regulation and
voluntary action. Over time, the Government will aim to reform
the tax system to increase incentives to reduce environmental
damage. That will shift the burden of tax from "goods"
to "bads"; encourage innovation in meeting higher environmental
standards; and deliver a more dynamic economy and a cleaner environment,
to the benefit of everyone.
5. But environmental taxation must meet the general
tests of good taxation. It must be well-designed, to meet objectives
without undesirable side-effects; it must keep deadweight compliance
costs to a minimum; distributional impact must be acceptable;
and care must be had to implications for international competitiveness.
Where environmental taxes meet these tests, the Government will
use them.
HM Treasury, July 1997
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