Budget 1999 – the main environmental measures

The Chancellor of the Exchequer's March 1999 Budget has been seen by many as relatively "green" in view of the number of environmental measures included. These are intended to address five main environmental impacts and problems: landfilling/waste disposal; climate change; quarrying; pesticide use; and vehicle emissions/transport.

The status of these measures is variable, with some coming into effect immediately whilst others are still in draft form or scheduled to apply from a later date. Some of the measures had already been announced in earlier Budgets. The main changes are outlined below.

• Landfill tax - The standard rate is raised to £10/tonne (from £7) from 1 April 1999 and will be increased further by £1/tonne per annum until the levy reaches £15/tonne from 1 April 2004. The existing rate for inert waste (£2/tonne) is unaltered.
• Landfill tax - From 1 October 1999, a new exemption will apply to inert waste used to restore landfill sites and fill old and working quarries where planning conditions or obligations exist requiring this.
• Landfill tax - The landfill tax credit scheme will be revised to promote recycling projects.
• Climate change - A greenhouse gas levy on the business use of energy will apply from April 2001, balanced by a reduction in employers' national insurance contributions and the introduction of a programme to encourage business use of renewable resources and improvements in business energy efficiency.

The levy will apply to gas, coal and electricity (not oils as these are already subject to the mineral oils duty) used by business, agriculture and the public sector for energy use but not to fuels used by the transport and domestic sectors or for generation or non-energy purposes. More information on tax rates should be included in next year’s Finance Bill. Certain energy intensive industries will be subject to lower rates of tax but negotiated agreements with the Government on energy efficiency will be required.

• Quarrying - Draft legislation on a tax on the extraction of hard rock, sand and gravel used as aggregates will be prepared although there is still a chance that voluntary measures may be agreed with the quarrying industry instead.
• Pesticides - A tax on pesticides may be introduced with the results of research and a consultation paper to be issued soon.
• Vehicle emissions - Taxes on leaded and unleaded (including super unleaded) petrol and diesel (including ultra low sulphur diesel) are all increased but by different rates according to their environmental impact. Duty on road fuel gases (e.g. LPG and CNG) is reduced.
• Vehicle emissions - A reduced rate of vehicle excise duty ("VED") of £100 will apply to cars with engines less than 1100cc from 1 June 1999. VED is increased for other cars and light commercial vehicles and from autumn 2000, the VED rate for new cars will be based on the level of carbon dioxide emissions. Duty is frozen for most lorries but increased for the new heavy lorries (11.5 tonne axle weights) to discourage their use and reduced by 55% for vehicles used for combined road/rail transport. VED discounts for low emission lorries and buses are increased.
• Vehicle emissions - The emphasis of the company car taxation framework is altered to move away from increased discounts for higher business mileage and older cars. Discounts for business mileage will eventually be abolished and the taxation framework is to be revised from April 2002 to introduce charges based on carbon dioxide and possibly other emissions. There is also an increase in fuel scale charges for company car drivers.
• Vehicle emissions - Measures to promote the use of less environmentally damaging forms of transport for commuting and to encourage employers to develop green transport plans are introduced. These include encouraging the use of cycles for business travel, promoting car sharing and removing tax charges on benefits in kind for employees using works buses, receiving public bus subsidies, and regarding bicycles and safety equipment, and workplace parking for bicycles.
• Transport - There is an increase in the rate of fuel duty rebate paid to local bus service operators and changes may be made to further encourage the use of buses with lower emissions.
• Transport - There is an increase in the funding for the rural transport fund to support the Government's integrated transport strategy.

Helen Harrison