Tory green tax pledge is drooping

It’s in the Tory manifesto. It even got into the coalition agreement. The pledge to “increase the proportion of tax revenues accounted for by environmental taxes”. So how is it going?

Those clever people at the IFS have had the calculator out and the answer is “not very well”. The coalition didn’t set itself a specific deadline for increasing the green tax take so the IFS assumes a “one parliament” duration, taking us to 2014/15.

Using OBR projections they think the green tax take falls from 6.9 per cent of taxes in 2009/10 to 6.5 per cent in 2014/15. They’d need to levy £2.5bn additional green taxes to get back to the level they started with, an increase of about 5 per cent.

If they wanted to go further, which presumably was the original thinking, and take the green tax share of taxes up to 7.5 per cent by 2014/15 they would need to raise an additional £6.7B, almost 15 per cent more than current predictions.

As the IFS points out, we are still waiting for the re-think on air passenger duty. The Lib Dem manifesto suggested that switching to a per plane charge rather than per passenger would rake in an extra £3b a year. That would fulfil the pledge to raise the green tax take.

You can see the IFS analysis in full here.