Critically Evaluate The Environmental Content Of The Chancellor's Recent Budget

2405 words - 10 pages

New Labours pre election manifesto, published in1997 aimed to convince the public that their commitment to the environment would be at the heart of policy making, naming theme self the first truly green party, once in government New labour promised to,"Put concern for the environment at the heart of policy-making, so that it is not an add-on extra, but informs the whole of government, from housing and energy policy through to global warming and international agreements." (Labour 1997)This was certainly strong talk and many environmental non government organizations were optimistic that the new government would keep to its word and put the green issues high on the political agenda. However many environmental institution regard New Labours efforts at most as "mediocre".One of the most prominent conflicts in environmental policy currently is the issue of environmental tax reform; there are numerous pressure groups all with strong interests in this debate and the government has had to tread carefully not to isolate any such groups. Key players in the dispute include environmental organizations, businesses small and large, farmers and the general public all with individual and diverging concerns over the issue.The key debate centers around correcting price distortions in the market caused as a result of the existing tax system. Currently there is a failure to fully internalize all the cost of environmental resource use and environmental damage. The famous economist Pigou argued that a taxation system should be implemented to fully compensate for the gap between the actual costs to the environment and what is being paid, internalizing the externalities. It is also argued that the contemporary tax systems present internationally place most of the tax burden on employment, capital and enterprise and a comparatively small amount on resource use and pollution. In the UK it is estimated that two thirds of this burden fall s on the former and only a third on the latter. Environmental economist contends that a gradual reversal of the current 2:1 ratio of taxation could be envisaged through a revenue-neutral program of changes. "Fiscal neutrality" is the term given to a balancing out of taxes paid so that the tax burden is not increased overall. Any new green tax introduced should be balanced by a reduction of tax on labour. Many policy makers favor using environmental taxation to reduce taxes on labour. It is hoped that is it will provide a "double dividend" and is one of the key arguments in favor of fiscal instruments to reduce environmental problems.Throughout Europe there has been a growing emphasis on taxing labour while taxing natural resources has been constant. Liam Salter of Climate Network Europe believes 'There is no particular reason why the bulk of the tax burden should fall on labour, other than historical precedent', he goes on to argue that "a long term strategy which shifts the forces of taxation onto resource use is essential for the...

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