Memorandum from Royal Society for the
Protection of Birds (RSPB)
The RSPB supports the process of environmental
tax reform as set out in the Government's Statement of Intent
in 1997. we welcome the new measures announced in the Pre-Budget
Report. However, we are concerned that the process of environmental
tax reform has stalled. We make the following observations:
The environmental tax reform agenda
disappointingly stalled during 2000.
The Government appears to have lost
sight of the 'polluter pays' principle in its willingness to address
the concerns of interest groups over new tax proposals.
Environmental taxes should primarily
seek behavioural change rather than acting as revenue-raising
mechanisms for environmental or other objections per se.
The Government must reinvigorate
the process of environmental tax reformthis will require
leadership from government and environmental NGOs alike.
The RSPB has broadly supported the process of
environmental taxation reform to date. We welcomed improvements
to the Landfill Tax and many areas of vehicle taxation, the introduction
of both the Climate Change Levy and the Aggregates Levy and the
launch of incentives schemes such as the Green Fuels Challenge
and the Green Technology Challenge. We recognise that considerable
progress has been made in the face of sometimes strong opposition,
most notably in the case of the Climate Change Levy. However,
we are now concerned that the process of environmental tax reform
is stalling. The points that follow should be set against our
broad satisfaction and optimism for the process of environmental
Although the Government has made considerable
progress in advancing previously proposed measures, the three-year
process of environmental taxation reform disappointingly appeared
to draw to a sudden halt in 2000. The Government has launched
initiatives, such as the Green Challenges, since the Pre-Budget
Report 2000. However, there are no current plans for either substantive,
new environmental taxes or necessary alterations to existing taxes.
These include agricultural taxes (on pesticides and possibly fertilisers)
and further improvements to the VED system and waste taxation.
Those major measures being portrayed by the Government as evidence
of current progress were initiated several years ago. In particular,
and whilst reservedly accepting the substitute voluntary approach,
the RSPB is disappointed by the Government's refusal to introduce
a tax on pesticides, contrary to the Environmental Audit Committee's
recommendation for such a levy.
The Green Challenges, whilst necessary and welcome,
are limited in their magnitude and outreach. Whilst the Government
has portrayed these initiatives as environmental taxation, they
are, in essence, simple subsidies. They represent a marked departure
from the mainstream and effective process of shifting the burden
of taxation from "goods" to "bads" that has
seen such great success in delivering environmental goals in the
UK and the EU alike. The same caveats apply to the ten welcome
new environmental measures announced in the 2001 Pre-Budget Report.
The process of environmental tax reform requires
careful balancing of the interests of manyoften opposingconstituencies.
The criteria for managing this process are clearly spelt out in
the Government's guidelines for "good" environmental
taxation. It is inevitable that every proposal for further environmental
tax reform will meet with opposition from vested interests. Even
the most carefully-designed, revenue-neutral green tax will produce
winners and losers. However, this is precisely the purpose of
environmental taxationand the aim of the "polluter
The RSPB believes that the Government has, in
many recent cases, undermined the "polluter pays" principle
and been over-sensitive to opposition from vested interests. For
example, the proposed tax on pesticides faltered due to excessive
caution over the perceived implications for farmers. The Climate
Change Levy will deliver lower reductions in greenhouse gas emissions
to compensate energy-intensive industrial sectors. The Aggregates
Levy already appears to be at risk of dilution from the Government's
apparent weakening in the face of pressure from UK quarrying companies.
The fuel protests of September 2000 undoubtedly offered further
succour to those opposed to green taxation. Despite the clear
difference between fuel taxation and well-designed environmental
levies, this episode clearly weakened the Government's resolve
to proceed further with the environmental tax agenda.
Environmental taxes should seek to change behaviour
rather than provide hypothecated funding for environmental objectives.
The original aim of reformshifting the burden of taxations
from "goods" (such as labour) to environmental "bads"
(such as pollution)remains the goal of today's proponents
of environmental tax reform. The RSPB would like the Government
to continue to pursue this objective.
Revenue-neutral taxes, such as the Landfill
Tax, Climate Change Levy and Aggregates Levy are broadly designed
to achieve this objective, and, if advocated correctly, will meet
with greater approval than revenue-raising taxes (such as road
fuel duty). Whilst many environmental objectives clearly do require
greater funding, securing this funding from environmental taxation
serves only to blur objectives and raise opposition to otherwise
There are some cases where environmental taxes
need to be accompanied by other measures to promote behavioural
change. This is true for pesticides, where demand is relatively
inelastic, and measures such as advice and incentives could positively
reinforce the effects of a tax. Environmental funding should be
secured from other sources and met by direct Government spending.
The RSPB sees a greater role for the Comprehensive Spending Review
in this processin this respect, the Treasury's request
for all Government Departments to issue a statement on the implications
for sustainable development of their bid under Spending Round
2000 is very welcome.
Following the fuel protests, the benefits of
environmental tax reform need to be much better communicated to
the public; environmental NGOs such as the RSPB should share the
responsibility for this. The fuel protests marked a nadir in this
process, and both Government and NGOs must share the burden of
reinvigorating the case for green taxation. Amongst the NGOs,
the RSPB was in the vanguard of putting the environmental case
for fuel taxation at the time of the protests, but found itself
pitted against a media that was focusing on the adversarial nature
of the crisis.
This process is markedly easier when tax design
is aligned with fiscal objectivesthese should be both clear
and sincere. If an environmental tax is designed as such then
the Government has a responsibility to portray it this way. Conversely,
if it is designed to raise revenue for other purposes, then this
should be clearly stated. These commonsense guidelines were clearly
not adhered to during the petrol crisis.
The Government should not hesitate to laud the
praises of well-designed, genuine and thorough environmental taxation.
The RSPB will do all it can to communicate this messagehowever,
ultimately the job of leadership must rest with government.