Lib Dems announce tax incentives for good environmental behaviour

The Liberal Democrats have announced a series of measures to reward environmentally friendly activities and penalise environmentally damaging ones, at their party conference this week.

Incentives would be put in place in order for consumers to choose less polluting and less damaging products and services, while polluters will be forced to pay for the environmental cost of their activities.

The announcement re-iterates the measures outlined by Lib Dem Shadow Environment Minister, Norman Baker, in an article written exclusively for in August (see Green taxation not more taxation).

Commenting on this week’s announcement, Mr Baker said: “The simple message is that polluters must pay. But, that doesn’t mean more tax for everyone; it means a fairer tax system that will financially reward those who use environmental factors in their decision making. By shifting the tax burden onto polluters, we can cut other taxes to help the poorest in society whose quality of life is already disproportionately affected by pollution.”

Key features of the plan to link economy and environment include:

  • Graduating tax on cars on the basis of emissions, to increase tax on high pollution vehicles and lower it for low emissions vehicles;
  • Replacing air passenger duty with aircraft departure duty to ensure maximum use of passenger flights and to start charging for freight flights;
  • Giving local authorities the powers to introduce variable waste charging, paying refunds to households that reduce the amount of waste they produce.

Part of this plan would be to increase the tax for 4X4 vehicles to the highest possible level. Matthew Taylor, Chairman of the Liberal Democrat party said that as the cars were “not environmentally friendly”, “use more fuel”, and were far more dangerous to pedestrians and children.

Research by the Lib Dems estimates that environmentally damaging behaviour will cost Britain approximately £67 billion this year, with over half that (£37 billion) coming from road transport. Domestic and commercial energy waste forms £5.7 billion of that, while flooding is estimated to cost the British economy £1 billion – a figure that could rise if action is not taken soon to combat flooding dangers.

In response to the announcement, a spokesperson for the Conservative party’s environment policy unit told edie that they were not averse in principle to the Lib Dems proposals, but were always wary of anything used as a stealth tax.

“We would use more carrot than stick in our policies,” she said. “We’ve always supported the polluter pays principle, but we would make sure it was revenue neutral. We opposed the Labour government’s tax on landfill as we can’t see the money being recycled back to where it was intended – it just gets used to line the Chancellor’s pockets.”

However, Vince Cable, Liberal Democrat Shadow Chancellor, said: “We are not proposing higher taxes but using existing taxes to reward environmentally friendly behaviour. The revenue from these taxes will not disappear into a bottomless pit within the Treasury but will be fed back into lower taxes elsewhere.”

By David Hopkins

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