Budget 2006 - A Brown not green budget
Keith Parkins | 23.03.2006 16:15 | Analysis | Ecology | Globalisation
Gordon Brown's last budget? A lost opportunity to set out his stall for the environment, his vision for the future.
'A budget for the future.' -- Gordon Brown
'The least significant budget in living memory.' -- Roger Bootle, economist
'A fossil-fuel chancellor.' -- David Cameron
Widely trailed as the budget for the environment. Where was it? I must have blinked, although it was not helped for listeners to BBC Radio 4 when Brown's budget speech was rudely interrupted by commentators who thought we were too stupid to understand and needed their commentary.
Vehicle Excise Duty for cars, the tax disc, is to be restructured. The lowest polluting cars will pay no tax, low polluters £40, the worst polluters, the gas guzzling 4x4s, will pay a higher rate of £210.
The only car that would appear to meet the criteria for zero excise duty is the Smart diesel.
The top rate of £210 will apply to a mere 1% of gas-guzzlers. The increase they will pay will be less than the cost of filling up their tanks at the filling station.
The posers who cough up £30,000 to drive around in a gas-guzzling 4x4 are going to be deterred by having to pay £210 for a tax disc. Er, somehow I don't think so. The top rate should have been set at at least £300.
The government's own research is that the level would have to be set at £900 to have an impact. If it ain't hurting, it ain't working.
Overall, there will be a reduction in Vehicle Excise Duty for cars.
The levy on fuel, Fuel Tax Duty, has been fixed for several years. Once again Brown announced no increase. The increase once again delayed.
Markets do not work efficiently unless we receive the true price signals.
Research in the US (by the International Center for Technology Assessment), admittedly applicable to the US, puts the environmental cost of road traffic at $9 a US gallon. These are real costs, someone pays them. Therefore with the cost of gasoline at around $2 a US gallon, the price would have to be set at $11 a US gallon, for the market to reflect the true cost when all externalities are taken into account.
An anomaly has arisen in the green tax on fuel, which will discourage rather than encourage the use of greener fuels. No attempt was made to address this anomaly.
There will be no tax on aviation fuel. Other taxes on air travel remain the same.
A tax on aviation fuel would be far better than a tax on tickets, as the sector hit hardest, in terms of tax per passenger, would be business aviation, with its low load factor.
Pensioners and those on benefits, will get substantial help towards home insulation costs.
Business has quite rightly criticised the Climate Change Levy as a tax on energy, not carbon emissions. This will remain as before.
Brown announced support for a joint scheme with Norway to fix carbon and store in the North Sea. A ludicrous hi-tech scheme, the money would be far better spent on innovative and practical schemes for energy saving and carbon reduction.
One small bit of good news. Money is to be allocated for micro-generation. This is a step in the right direction as we should be looking towards local energy self-sufficiency, not large-scale schemes.
Brown announced funding for an environmental research institute. This comes hard on the heals of the government closing down research facilities.
Brown also announced funding for an energy research institute. But much of the funding is to come from the big energy players, who many see as the villains.
What is now needed is not so much more research, but practical implementation of environmental and renewable energy schemes.
Earlier this year Portugal announced the construction of the first off-shore commercial wave power generation scheme. All the research was done in the UK.
Both Germany and Japan, have had had financial incentives for the installation of rooftop power generation, which has enabled ambitious targets to be met early.
Denmark is only a small country. Tax incentives for wind power have turned Denmark into a world leader for wind turbines.
Pensioners and the disabled are to be given free national off-peak bus travel, currently only patchy free local travel. Why not free rail travel too?
Pensioners are to get the additional fuel payments as they did last year, but these will be wiped out by increase in fuel prices and Council Tax bills.
More public land is to be released for building, progress through the planning system accelerated. Good news for property developers, bad news for the environment.
At the close of trading, share prices for property companies had soared on the good news.
The tax on cigarettes only went up by inflation.
Currently, the overall tax take by environmental taxes, minuscule as it is, is falling compared with the overall tax burden.
In 2001, Sweden launched a ten-year plan to shift taxes from income to environmentally damaging activities. A 30 billion kroner programme ($3.9 billion). By 2005, Sweden was running slightly ahead on its programme, making it a world leader in environmental tax reform.
We need a substantial shift in the tax base away from a tax on income, a tax on profit, to a tax on resource use, a tax on waste generation, a tax on pollution. The overall impact being tax neutral on the economy.
There was no mention of this, not even a hint that it will be included in Brown's ten year review due next year.
As Jonathan Porritt (Forum for the Future) pointed out on the Today programme earlier in the day, the UK Treasury lacks even a model of resource and waste flow through the British economy. [Today programme, BBC Radio 4, 22 March 2006]
If this was a green budget from Brown, then it was an abysmal failure.
The legacy of Gordon Brown is a deteriorating environment and a disparity between rich and poor, a growing inequality gap, that is even worse than it was under Margaret Thatcher.
Web
http://www.bbc.co.uk/budget
http://www.neweconomics.org/
http://www.greenpeace.org.uk/
http://www.foe.co.uk/
ref
Lester R Brown, Plan B 2.0, Norton, 2006
Paul Hawken, Amory B Lovins & L Hunter Lovins, Natural Capitalism, Earthscan, 1999
Andrew Kimbrell et al, The Real Price of Gasoline, International Center for Technology Assessment, 1998
Keith Parkins, Energy Tax, February 1999
http://www.heureka.clara.net/gaia/energy2.htm
Keith Parkins, Natural Capitalism, October 2000
http://www.heureka.clara.net/gaia/nat-cap.htm
Keith Parkins, Soft Energy Paths, May 2001
http://www.heureka.clara.net/gaia/energy.htm
Keith Parkins, Renewable energy: biofuels and local power generation, Indymedia UK, 17 February 2006
http://www.indymedia.org.uk/en/2006/02/333901.html
Ernst von Weizsacker, Amory B Lovins & L Hunter Lovins, Factor Four: Doubling Wealth, Halving Resource Use, Earthscan, 1997
'The least significant budget in living memory.' -- Roger Bootle, economist
'A fossil-fuel chancellor.' -- David Cameron
Widely trailed as the budget for the environment. Where was it? I must have blinked, although it was not helped for listeners to BBC Radio 4 when Brown's budget speech was rudely interrupted by commentators who thought we were too stupid to understand and needed their commentary.
Vehicle Excise Duty for cars, the tax disc, is to be restructured. The lowest polluting cars will pay no tax, low polluters £40, the worst polluters, the gas guzzling 4x4s, will pay a higher rate of £210.
The only car that would appear to meet the criteria for zero excise duty is the Smart diesel.
The top rate of £210 will apply to a mere 1% of gas-guzzlers. The increase they will pay will be less than the cost of filling up their tanks at the filling station.
The posers who cough up £30,000 to drive around in a gas-guzzling 4x4 are going to be deterred by having to pay £210 for a tax disc. Er, somehow I don't think so. The top rate should have been set at at least £300.
The government's own research is that the level would have to be set at £900 to have an impact. If it ain't hurting, it ain't working.
Overall, there will be a reduction in Vehicle Excise Duty for cars.
The levy on fuel, Fuel Tax Duty, has been fixed for several years. Once again Brown announced no increase. The increase once again delayed.
Markets do not work efficiently unless we receive the true price signals.
Research in the US (by the International Center for Technology Assessment), admittedly applicable to the US, puts the environmental cost of road traffic at $9 a US gallon. These are real costs, someone pays them. Therefore with the cost of gasoline at around $2 a US gallon, the price would have to be set at $11 a US gallon, for the market to reflect the true cost when all externalities are taken into account.
An anomaly has arisen in the green tax on fuel, which will discourage rather than encourage the use of greener fuels. No attempt was made to address this anomaly.
There will be no tax on aviation fuel. Other taxes on air travel remain the same.
A tax on aviation fuel would be far better than a tax on tickets, as the sector hit hardest, in terms of tax per passenger, would be business aviation, with its low load factor.
Pensioners and those on benefits, will get substantial help towards home insulation costs.
Business has quite rightly criticised the Climate Change Levy as a tax on energy, not carbon emissions. This will remain as before.
Brown announced support for a joint scheme with Norway to fix carbon and store in the North Sea. A ludicrous hi-tech scheme, the money would be far better spent on innovative and practical schemes for energy saving and carbon reduction.
One small bit of good news. Money is to be allocated for micro-generation. This is a step in the right direction as we should be looking towards local energy self-sufficiency, not large-scale schemes.
Brown announced funding for an environmental research institute. This comes hard on the heals of the government closing down research facilities.
Brown also announced funding for an energy research institute. But much of the funding is to come from the big energy players, who many see as the villains.
What is now needed is not so much more research, but practical implementation of environmental and renewable energy schemes.
Earlier this year Portugal announced the construction of the first off-shore commercial wave power generation scheme. All the research was done in the UK.
Both Germany and Japan, have had had financial incentives for the installation of rooftop power generation, which has enabled ambitious targets to be met early.
Denmark is only a small country. Tax incentives for wind power have turned Denmark into a world leader for wind turbines.
Pensioners and the disabled are to be given free national off-peak bus travel, currently only patchy free local travel. Why not free rail travel too?
Pensioners are to get the additional fuel payments as they did last year, but these will be wiped out by increase in fuel prices and Council Tax bills.
More public land is to be released for building, progress through the planning system accelerated. Good news for property developers, bad news for the environment.
At the close of trading, share prices for property companies had soared on the good news.
The tax on cigarettes only went up by inflation.
Currently, the overall tax take by environmental taxes, minuscule as it is, is falling compared with the overall tax burden.
In 2001, Sweden launched a ten-year plan to shift taxes from income to environmentally damaging activities. A 30 billion kroner programme ($3.9 billion). By 2005, Sweden was running slightly ahead on its programme, making it a world leader in environmental tax reform.
We need a substantial shift in the tax base away from a tax on income, a tax on profit, to a tax on resource use, a tax on waste generation, a tax on pollution. The overall impact being tax neutral on the economy.
There was no mention of this, not even a hint that it will be included in Brown's ten year review due next year.
As Jonathan Porritt (Forum for the Future) pointed out on the Today programme earlier in the day, the UK Treasury lacks even a model of resource and waste flow through the British economy. [Today programme, BBC Radio 4, 22 March 2006]
If this was a green budget from Brown, then it was an abysmal failure.
The legacy of Gordon Brown is a deteriorating environment and a disparity between rich and poor, a growing inequality gap, that is even worse than it was under Margaret Thatcher.
Web
http://www.bbc.co.uk/budget http://www.neweconomics.org/ http://www.greenpeace.org.uk/ http://www.foe.co.uk/ ref
Lester R Brown, Plan B 2.0, Norton, 2006
Paul Hawken, Amory B Lovins & L Hunter Lovins, Natural Capitalism, Earthscan, 1999
Andrew Kimbrell et al, The Real Price of Gasoline, International Center for Technology Assessment, 1998
Keith Parkins, Energy Tax, February 1999
http://www.heureka.clara.net/gaia/energy2.htm Keith Parkins, Natural Capitalism, October 2000
http://www.heureka.clara.net/gaia/nat-cap.htm Keith Parkins, Soft Energy Paths, May 2001
http://www.heureka.clara.net/gaia/energy.htm Keith Parkins, Renewable energy: biofuels and local power generation, Indymedia UK, 17 February 2006
http://www.indymedia.org.uk/en/2006/02/333901.html Ernst von Weizsacker, Amory B Lovins & L Hunter Lovins, Factor Four: Doubling Wealth, Halving Resource Use, Earthscan, 1997
Keith Parkins
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http://www.heureka.clara.net/gaia/index.htm
