Brown Likely To Present 'Green' Pre-Budget Report

by Robert Lee, Tax-News.com, London

27 November 2006

Chancellor of the Exchequer Gordon Brown's pre-Budget speech will reportedly contain new environmental taxes that will take aim at air travellers and drivers of four-wheel-drive vehicles.

According to a report in the Financial Times, Brown is said to be in favour of increases in indirect taxation on the consumption of the most heavily polluting activities in the wake of the Stern report on climate change, which has recommended urgent action to avert global warming.

This is likely to lead to an increase in air passenger duty, currently GBP5 for short-haul flights and GBP40 for long-haul flights, and another increase in the top rate of Vehicle Excise Duty (VED), following the introduction of a new top band in the March 2006 budget of GBP210 per year.

The government has also been said to have given thought to a reintroduction of the fuel duty 'escalator,' which increased the cost of petrol by 6% over the rate of inflation until abolished by Brown in 1999, although such a move would be likely to provoke strong opposition from the road transport lobby.

However, the FT report, which cited Whitehall insiders, suggested that Brown is not in favour of a comprehensive system of environmental taxes and instead puts much faith in the creation of a global carbon trading market to reduce greenhouse gas emissions. He is expected to express his support for this idea when he presents the pre-Budget report on December 6.

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