HC Deb 30 October 1997 vol 299 cc1025-6
16. Mr. Sheerman

If he will assess the advantages of applying taxes to resources rather than labour. [12664]

Dawn Primarolo

The Government's statement of intent on environmental taxes, issued in the July Budget, demonstrates our commitment to the use of economic instruments to achieve environmental objectives. However, we will look at the advantages and disadvantages of taxes on a case-by-case basis. In each case, it is important to consider all the effects of a tax, including its distributional impacts, and any implications for competitiveness.

Mr. Sheerman

My hon. Friend will know that the decision by the Chancellor to examine the issue of environmental taxation seriously, rather than going for a quick fix, was widely welcomed. I ask the Government to continue the work on environmental taxation and to consider—with no prejudice—the landfill tax introduced by the right hon. and learned Member for Rushcliffe (Mr. Clarke) in his penultimate Budget. It has been very effective in changing the environment. I hope that we can build on that rather than ignoring it.

Dawn Primarolo

I confirm that the cross-party support for the introduction of the landfill tax, which has been a successful measure—its first year of operation is currently being reviewed by the Government—is an excellent example of how an environmental tax can work.

Mr. Gibb

Given the European Union tax harmonisation proposals, which were discussed by the Chancellor at the recent Economic and Finance Council meeting, is it the Government's long-term intention to hand over direct tax policy to Brussels? Or will the Financial Secretary today commit the Government to vetoing those proposals at the next ECOFIN meeting?

Dawn Primarolo

As the hon. Gentleman well knows, we have a veto and we have always declared our intention to use it when that best serves British interests.