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GFC final report

For a number of years green taxes in the UK have been in retreat. Most people remember the fuel tax protests in 2000. Ever since then politicians have found the area of green taxes a very difficult area to deal with. The Green Fiscal Commission was created to look into this difficult area and break the political logjam surrounding environmental tax reform.

The objective of the Commission was to prepare the ground for a significant programme of green fiscal reform in the UK. The Commission’s Terms of Reference were agreed at the first meeting of the Green Fiscal Commission on 29 May 2007. These are given below and include details of the objectives of the Commission, its methods and the scope of its work.

Terms of Reference

“There is now general agreement among policy analysts that a significant programme of green fiscal reform (in which environmental taxes are increased, and other taxes are reduced in a fiscally neutral way) could play a considerable role in contributing to the cost-effective solution of environmental problems, and in particular climate change.

The objective of the Green Fiscal Commission (GFC) is to prepare the ground for a significant programme of green fiscal reform in the UK, in terms of both assembling the evidence base for such a reform, and raising stakeholder and public awareness of it. The GFC will achieve this through:

  • Provision of authoritative, accessible and independent research on the options for environmental tax reform in the UK and assessment of the social, environmental and economic implications of these proposals;
  • Use of media and other communication activities to raise awareness and understanding of the options for environmental tax reform and stimulate public and political debate on them

The work of the GFC will investigate a green fiscal reform with the following characteristics:

  • It will involve a substantial tax shift, such that, for example, 20 per cent of tax revenues come from green taxes by 2020;
  • The environmental benefits will be amplified by selective use of a small proportion of the tax revenues to incentivise less environmentally damaging behaviour and investment in technologies that reduce environmental impacts;
  • It will not have a disproportionate impact on already disadvantaged groups;
  • It will take account of and seek to mitigate negative effects on business competitiveness, and foster new sources of comparative advantage as the basis for new businesses.

Terms of reference - pdf format