12 March 1998

Rt Hon Peter Lilley MP (Con. Hitchen and Harpenden) Shadow Chancellor of the Exchequer

We don't want to see additional taxation in the Budget. We had taxes which were used to reduce the burden of tax elsewhere that fell on things which were economically damaging, but it's up to the Government to make specific proposals on that. We introduced the land tax which was the first such environmental tax and used all the proceeds to reduce the cost of employing people by reducing National Insurance contributions that employers pay.

We did set a programme for increasing taxes on motor fuel and we thought that that was at a reasonable rate which would give an incentive to users to reduce their consumption, and indeed, for producers of motor cars and other fuel-using machinery to make them more fuel efficient. By spelling it out in advance that there would be an increase, that enabled them to have time to improve efficiency.

Certainly we took a view that it was important to shift the balance of taxation from things which don't damage the environment to things that do, and began that process. We will look closely at what the Government produces, to make sure they are doing the same and not simply using a notional excuse of environmental damage to raise the burden of taxation in ways which may or may not have any benefit to the environment.

We would oppose the Government moving more rapidly than we had set down, because the immediate impact on car use is not enormous. The long-term effect on the use of fuel is greater because people have an incentive then to move to more fuel-efficient vehicles. We would oppose the Government if they jack up motoring taxes further, as they did, as a way of raising more money, which is basically what this government seems obsessed with doing, rather than anything that really will be beneficial to the environment.

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