'Green Taxes Would Not Replace Other Taxation'

Article excerpt

Ministers should not expect to raise much additional revenue from "green taxes" to fund cuts in other levies like income tax, a report published today warns.

The report estimates the income from the most economically efficient forms of green taxation at pounds 13 billion a year, but says revenue gain to the Treasury would probably be well under one per cent of GDP.

The authors of the report give strong support to a national system of road-pricing - one of the most controversial green measures considered by the Government - but say it should be offset by cuts in road fuel duty, which they argue is much higher in the UK than can be justified by the environmental damage from emissions.

They are less enthusiastic about "bin taxes", suggesting charging for household waste is likely to produce "only modest potential welfare gains ... at the risk of increased dumping and other avoidance".

The report was prepared by academics Don Fullerton of the University of Texas and Andrew Leicester and Stephen Smith of University College London as a submission to Nobel laureate Sir James Mirrlees' review of the UK tax system for the Institute for Fiscal Studies, due early next year.

The authors - whose findings will not necessarily be reflected in Prof Mirrlees' final report - argue while there is a good case for green taxes, politicians should base their appeal on the environmental benefits, not potential for cuts elsewhere. …