Environmental and Transport Taxation Policy

The Government is committed to improve the quality of life for everyone by ensuring that development occurs in a sustainable way, balancing economic, social and environmental considerations. Society needs to make more productive use of existing natural resources by engaging in more environmentally friendly practices and investing and developing new and renewable technologies. This will help achieve the quality of life we expect today and for generations to come. The quality of the environment affects everyone’s quality of life, directly through – for example – the air and water they consume, and also through longer-term influences such as climate change.

The Government’s strategic framework for delivering its environmental objectives is set out under the following themes:

• tackling climate change and improving air quality;
• regenerating  Britain’s towns and cities; and
• protecting Britain’s countryside.

All sectors of the economy need to a play a part in tackling climate change and air quality. The Government has put in place a range of policies to generate improvements across the UK. These include policies relating to business, households and transport.

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To help tackle climate change and improve air quality:

• introducing the climate change levy package from 1 April 2001;
• an emissions trading scheme;
• Green Fuel Challenge to promote cleaner fuels;
• a new Green Technology Challenge to further promote cleaner technologies;
• tax incentives for businesses to promote greener modes of travel; and
• fuel duty differentials to promote use of cleaner and alternative fuels.

To help regenerate Britain’s towns and cities:

• a stamp duty exemption for property transactions in Britain’s disadvantaged areas;
• a cut in VAT to 5%  to encourage renovation and conversion of existing property;
• 100% capital allowances for creating flats over shops; and
• 150% accelerated tax credits to help clean-up contaminated land.

To help protect Britain’s countryside:

• the introduction of the aggregates levy and the Sustainability Fund from April 2002;
• acceptance of voluntary proposals from industry to reduce the environmental impact of pesticides use to be implemented from 1 April 2001;
• pre-announced annual increase in landfill tax to £12 per tonne, and plans to consult on future reform of the landfill tax credit scheme whilst challenging industry to allocate more tax credits towards sustainable waste management; and
• has set a challenging target for the waste industry to allocate 65% of tax credits towards sustainable waste management.

Also see:

Internal Links
Frequently Asked Questions about the Government's Policy towards the Environment

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Taxation and the Environment index