THE PRE-BUDGET REPORT 1999: PESTICIDES, AGGREGATES
AND THE CLIMATE CHANGE LEVY
GOVERNMENT CONSULTATION / MANAGEMENT OF PROPOSED
TAXES
102. In examining each of these three environmental
tax measures in detail—pesticides, aggregates, and the Climate
Change Levy—it appeared to the Committee that there had
been some significant differences in the approach the Government
had adopted in developing its proposals. We would pick out in
particular the following points.
103. In the case of pesticides, the Government has
not conducted any study of the total environmental costs (cost
externalities) which the use of pesticides gives rise to. These
would include direct financial costs resulting from any excessive
use of pesticides, the costs imposed on the water industry in
removing pesticide residues from the water supply, and financial
valuations of the impact of pesticides on biodiversity through
the use of contingent valuation techniques. The only studies which
have actually been carried out relate to the first of these—
the scope for farmers to make cost-effective reductions in the
use of pesticides. There have been no Government studies which
have attempted to evaluate all three. This approach contrasts
strongly with that adopted by the Government on aggregates, where—as
the Minister has acknowledged—it spent a considerable amount
of money on financially evaluating the impacts on the environment
in terms of the noise, dust, transport effects, and adverse effects
on biodiversity and landscape. We also found it interesting that
the Government placed such reliance on this study in driving forward
its tax proposals for aggregates. We therefore recommend that
the Government adopts a consistent approach in the evaluation
and use of financial and non-financial costs and benefits in considering
possible environmental tax measures.
104. In each of the three taxes there has been
some form of formal consultation exercise. But the timing of these
in relation to the process of which they are a part and the extent
to which these have addressed key issues of concern have varied
significantly. A number of organisations, for example, suggested
that the formal consultation on the Levy was mainly confined to
technical issues and that the main issues of principle had been
already decided by the Government.[223]
We have noted above that the failure by the Government to properly
consult and secure a consensus approach on the issue of eligibility
for rebates is causing considerable concern among industry and
may lead to further delays in the timetable for finalising negotiated
agreements. By contrast, the formal consultation on aggregates
closed in September 1998 and therefore pre-dated many significant
later developments such as the final London Economics report and
the proposals for a voluntary scheme put forward by the industry
association. The QPA commented that there had been little subsequent
attempt by the Government to enter into any dialogue with them
to attempt to clarify the Government's objectives or criteria,
while environmental organisations complained that they had not
been involved in the process and in helping to develop the industry's
proposals.[224] Even
on the Levy, where discussion has been greater, the Society of
Motor Manufacturers and Traders told us that they had only become
aware of DETR bilateral discussions with industry sectors from
reading newspaper reports.[225]
Here again, we feel that the Government can give more substance
to its new-found enthusiasm for "partnership approaches".
105. Other aspects of the processes also gave us
some cause for concern:
In the case of the Levy there were obvious and very
clear objectives for the tax—namely the reduction of carbon
emissions—although these have been to some extent imposed
as a result of the UK's Kyoto commitments. By contrast, in the
case of aggregates the objectives of the tax and the criteria
for appraising the voluntary proposals were particularly obscure.[226]
It became apparent to us that relevant good data
were sometimes not available. In the case of aggregates there
was an obvious lack of up-to-date information on the volumes of
each waste stream arising and the extent of recycling.[227]
This was particularly surprising in view of the Government's emphasis
on recycling. Even in the case of the Levy, we received evidence
that there were in some cases significant problems with data on
energy use and cost effective savings.[228]
A number of submissions raised concerns about hypothecation
and pointed out, for example, that the Government's policy on
whether or not revenues would be recycled would materially influence
their views. In the absence of such a steer, it was impossible
to form a definitive view.[229]
106. In assessing these various factors, we can only
conclude that the Government appears to be pursuing a visibly
harder line with the aggregates industry than it has for the pesticides
industry—even though there is, both theoretically and practically,
a particularly strong case for introducing a tax on pesticides.
The Government's approach to each of the three taxes has been
markedly different. A Green Tax Commission would ensure greater
consistency of approach in researching and developing tax proposals
and in building consensus between Government, business and industry
and environmental advisory bodies and NGOs.
223 Ev p94, 113, 162 etc. See also Customs and Excise
Climate Change Levy: an analysis of responses to the consultation,
November 1999. Back
224
QQ97-99, 179 Back
225
Q242 Back
226
QQ97-99. Ev p54 Back
227
See paragraphs 37-40 Back
228
See paragraph 89 Back
229
Eg Q143 Back
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