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Last Updated: Tuesday, 26 October, 2004, 23:32 GMT 00:32 UK
Green taxes 'would hit poor most'
Waste set for recycling
The report looked at waste disposal and energy consumption
Poor families would be hardest hit by "green" taxes designed to protect the environment, research suggests.

The study found poorer households used a higher rate of natural resources such as gas, electricity and water, meaning they would face a bigger tax bill.

It said the impact could be eased by raising the rate for higher earners or by compensating poorer families.

But even then, the Policy Studies Institute found some low income households would remain worse off.

Households will also have the option of responding to the new tax or charge by cutting their consumption of the resource
Professor Paul Ekin
Green taxes are aimed at cutting the use of natural resources and encouraging recycling of waste.

Variable rates

The study, by the Policy Studies Institute and released by the Joseph Rowntree Foundation, focused on domestic use of energy, water and transport, as well as the amount of rubbish produced.

It looked at the impact of the introduction of flat-rate green taxes and considered what effect variable-rate taxes and compensation schemes would have on poorer households.

In all alternative programmes considered, most low income families were "substantially" better off, the report said.

The research found that:

  • Changes to stamp duty and council tax to reward homes that were more energy-efficient could cut consumption by 10% and save households almost 20bn
  • Water meters or a variable tariff linked to the council tax band would be a more equitable means of charging for water usage, which it said was at an unsustainable level
  • If petrol taxes were increased, vehicle excise duty could be abolished for poorer drivers
  • Waste collection and disposal charges could be removed from council tax and replaced with a charge based on the weight of unsorted waste.

'Net losers'

Professor Paul Ekins, co-author of the report, said: "The results from this research can help policy makers ensure that, if environmental taxes and charges are introduced, they are designed in ways that prevent unintended consequences for people who live on low incomes.

Heating their homes costs many poor families 10% of their income
"In general, it is possible to solve the disproportionate impact on poorer households."

However the report found that since the consumption of resources varied widely within income groups, around one in 50 of the country's poorest households would always be "net losers".

Professor Ekins said those families would need to change their habits.

"[They] have the option of responding to the new tax or charge by cutting their consumption of the resource being taxed, further reducing the number of net losers," he said.

"Further targeted compensation measures should be able to prevent unacceptable hardship among those who remain."

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