Grey Budget with shades of Brown

In his first
Budget,
Alistair Darling unveiled a raft of environmental incentives for business and
individuals – such as his car tax reforms that will rake in around £1.2bn over
the next three years.

Changes to Vehicle Excise Duty include six new tax bands to make drivers pay
as they pollute, with the highest polluting vehicles charged £425 annually. The
tax banding does not include new cars, which will have a separate scheme in
their first year – excluding low-emission vehicles from any tax and leaving the
worst emitters with the highest rate.

Environmental tax partner at KPMG Frank Sangster believes the new tax bands
are little more than a “revenue-raising exercise”, adding that the Budget does
not quantify the emission reductions by implementing the new scheme.

Other environmental announcements included:
• Increasing climate change levy rates in line with inflation;
• Increasing the aggregates levy by five pence per tonne starting on 1 April
2009; and
• An increased drive to develop the energy services market and support
businesses, consisting of working with businesses to promote knowledge of energy
services, and energy suppliers providing smart meters for medium and large
businesses within the next five years.

The Chancellor also announced a five-year carbon budget to start next year,
as well as asking the Climate Change Committee to review whether the
government’s target in the climate change bill to reduce emissions by 60% by
2050 should be raised to 80%.