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Last Updated: Thursday, 2 November 2006, 17:23 GMT
Green tax take 'lower than 1997'
Chancellor Gordon Brown, prior to the 2005 Budget
Pressure is growing on Gordon Brown over green taxes
Green taxes account for a lower share of the UK's total tax take than when the government came to power in 1997, according to a report.

The share of national income derived from green tax receipts in 2005 hit its lowest level since 1993, the Institute for Fiscal Studies (IFS) claimed.

Green tax receipts peaked in 1999 but have fallen since then.

Chancellor Gordon Brown has said raising green taxes is just one way of tackling carbon emissions.

Emission targets

Endorsing the recent Stern Review into the potentially devastating impact of climate change, Mr Brown has said action was needed on all fronts.

A similar line was taken in the Treasury's response to the IFS report.

"Focusing on environmental tax receipts fails to recognise the importance of measures which incentivise green behaviour but do not raise revenue," a Treasury spokesman told the BBC.

"The fact is that the UK is one of only very few countries on course to meet its Kyoto treaty targets."

However, some experts believe the government will have to raise petrol duty and tax aircraft fuel, among other things, to meet its long-term emission targets.

There will doubtless be strong pressure on the Chancellor to push up green tax revenues
Andrew Leicester, Institute for Fiscal Studies

In a study of the current environmental tax regime, the IFS found the UK's green tax-take, in terms of total receipts and income, was larger than the international average.

But when adjusted for inflation, it concluded that green tax receipts had fallen, in real terms, from a peak of 37.7bn in 1999 to 35bn in 2005.

The reduced yield was largely a result of the abolition of mandatory fuel price rises in 1999.

"Green tax revenues are now at their lowest level, in real terms, for almost a decade," said the Institute's Andrew Leicester.

"In the wake of the Stern report, there will doubtless be strong pressure on the Chancellor to push up green tax revenues."

The government could announce its intentions in regard to green taxes in the pre-Budget report, which is expected to be in late November.

Both the Conservatives and Liberal Democrats have called for higher levels of green taxes.

More taxes

The UK now has more green taxes than ever, the IFS said.

Since 1997, the government has introduced the Climate Change and Aggregates Levies, tripled the rate of Landfill Tax and reformed Vehicle Excise Duty to increase the tax burden on heavily polluting vehicles.

It also launched an emissions trading scheme, which provided the blueprint for the EU-wide initiative launched in 2005.

"There has been considerable activity in environmental taxes in recent years even as total real-term revenues have fallen," Mr Leicester added.

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