Pre-budget 2005 : tax, economic analysis and climate change, fourth report of session 2005-06, report, together with formal minutes, oral and written evidence

The Committee reports on the progress made by the Treasury in placing environmental objectives at the heart of its fiscal policies.

This year's pre-Budget report (Cm. 6701, December 2005, ISBN 0101670125) is found to be inadequate, especially in the context of UK CO2 emissions actually increasing once more.

No significant new measures were announced, and the Committee sees a continued slowing down of the Treasury's momentum in turning rhetoric into action.

It believes the Treasury should redefine Air Passenger Duty (APD) as an environmental tax and that APD rates should more accurately reflect the carbon emissions of the flights to which they apply.

Charging APD on flights rather than passengers could also act as an incentive to more efficient use of aviation fuel.

The Committee also recommends action on aviation fuel duty, biofuels, car energy efficiency, steps to wean the economy of over-reliance on oil, stamp duty and council tax reductions for homes built or refurbished to high environmental standards.

Each pre-Budget report should include figures on total revenue from the climate change levy, aggregates levy, and landfill tax. Although the Treasury accepts the principle of increasing taxes on "bads" rather than "goods" its reluctance for bold reform of the tax system mystifies the Committee.

A Green tax Commission should be reconsidered, to develop a proper communications strategy to sell the environmental programme to the public.

The Committee exhorts the Government to make moves on the climate change problem, as waiting for universal agreement is a recipe for stasis.

Finally, the Committee regrets the Treasury's decision to abolish the "Operating and Financial Review" required from large companies, in that it appears to view sustainable reporting as an optional extra.

It hopes that the proposed new business reviews will continue to require some form of social and environmental disclosure from companies.