§ Norman BakerTo ask the Chancellor of the Exchequer what his policy is on the selective use by the EU of economic instruments where the aim is to influence environmental behaviour. [102473]
§ John HealeyEconomic and market-based instruments are one of the range of instruments that can be used to influence environmental behaviour. As stated in the European Economic Reform White Paper 'Realising Europe's Potential', published in February 2002, the Government are in favour of the use of such instruments at Community level where these are most appropriate.
The voluntary agreements with car manufacturers on carbon dioxide emissions from new cars and the forthcoming EU Emission Trading Scheme are good examples of the community, with the Government's support, developing economic and market-based instruments where these are most appropriate to address environmental issues with a strong trans-boundary or single market dimension.
Generally, the Government will only allow departures from member states' freedom to set tax rates and bases where there are strong, specific reasons for the UK to do so which would otherwise be undermined by a lack of community level action. For example, the Government recognise that there are strong and specific reasons to agree common approaches to tackle climate change. Otherwise, for example, businesses could relocate within the EU to member states that did not tax the causes of climate change—thereby not reducing climate change at all.
For this reason, the Government are prepared to agree to the proposed EU energy products directive that would increase the minimum rates of duty on road fuels within the EU and introduce minimum rates on some other energy products. This proposal is currently being discussed in Brussels and the Government expect that agreement will be reached on it shortly. However, the Government believe that member states should be free to tax more than the minimum rates if they wish to do so.
§ Norman BakerTo ask the Chancellor of the Exchequer what steps he takes to ensure that his use of economic instruments is consistent with sound environmental practice; if proposals for tax changes are always subject to prior environmental impact assessment; and if he will make a statement. [102474]
§ John HealeyThe Chancellor takes account of all relevant social, economic and environmental factors when deciding taxation policy. The environmental impacts of Budget measures are taken into account in the Budget decision-making process. The impacts of any measures which have a significant environmental effect are published in the Budget and pre-Budget report documents.
The document 'Tax and the environment: using economic instruments', published with the 2002 pre-Budget report, sets out how the Government use an evidence-based approach based on an assessment of costs and benefits when developing environmental policy measures.