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Motoring news

Think-tank proposes 'green tax' shakeup

26/10/2009

A think-tank is urging a rethink of taxation to help the UK meet its environmental targets.

And its proposals, which cover business, household and transport emissions, include the introduction of a steep rise in fuel duty and a levy on new cars.

The suggestions are contained within the final report of the Green Fiscal Commission (GFC), an independent body set up to examine the operation of environmental taxes, and the public response to them. The commission's work centres around moving taxation from non-polluting activities, such as labour, onto those that cause environmental damage.

Among its recommendations, the GFC argues for fuel duty to be tripled over the next decade - a move that could take petrol to around £2 a litre - and for a £300 green tax on new cars which would rise to £3,300 by 2020. However, the extra income would be balanced by cuts in income tax and National Insurance.

The report's author Paul Ekins, professor of energy and environment policy at University College London, explained that the changes would be almost neutral to the economy, but would shift taxation towards a system where the polluter pays.

"It's really a question of moving a mindset," he said. "We've had it as a given that energy is cheap, so we have been wasteful."