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Two unannounced environmental tax reforms in the UK: The fuel duty escalator and income tax in the 1990s

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  • Ekins, Paul
  • Kleinman, Harold
  • Bell, Sarah
  • Venn, Andrew

Abstract

Environmental tax reform (ETR) is a process of shifting the weight of taxation from socially desirable activities, such as labour and profit-generation, to the use of natural resources and the generation of pollution. The paper calculates the revenues from the UK fuel duty escalator (FDE) (an above-inflation increase in fuel duty implemented from 1993 to 1999), and compares these with the revenues lost from the cuts in income tax in 1995 and 1996, and again in 2001. The paper finds that the lost revenue was roughly the same as the revenue from the FDE. In effect the governments concerned had implemented an ETR without in any way drawing attention to the fact. The FDE was discontinued in 1999 when the oil price rose and, in the face of protests at the level of fuel duty the following year, real revenues from fuel duty subsequently declined. It is at least arguable that, had the fact that FDE had facilitated income tax cuts been established by the government at the time, the FDE and fuel duty generally would have been less unpopular.

Suggested Citation

  • Ekins, Paul & Kleinman, Harold & Bell, Sarah & Venn, Andrew, 2010. "Two unannounced environmental tax reforms in the UK: The fuel duty escalator and income tax in the 1990s," Ecological Economics, Elsevier, vol. 69(7), pages 1561-1568, May.
    • Handle: RePEc:eee:ecolec:v:69:y:2010:i:7:p:1561-1568
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    References listed on IDEAS

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    1. Patuelli, Roberto & Nijkamp, Peter & Pels, Eric, 2005. "Environmental tax reform and the double dividend: A meta-analytical performance assessment," Ecological Economics, Elsevier, vol. 55(4), pages 564-583, December.
    2. Bosquet, Benoit, 2000. "Environmental tax reform: does it work? A survey of the empirical evidence," Ecological Economics, Elsevier, vol. 34(1), pages 19-32, July.
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    1. Mahlia, T.M.I. & Tohno, S. & Tezuka, T., 2013. "International experience on incentive program in support of fuel economy standards and labelling for motor vehicle: A comprehensive review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 18-33.
    2. Shmelev, Stanislav E. & Speck, Stefan U., 2018. "Green fiscal reform in Sweden: Econometric assessment of the carbon and energy taxation scheme," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 969-981.
    3. Webster, Allan & Ayatakshi, Sukanya, 2013. "The effect of fossil energy and other environmental taxes on profit incentives for change in an open economy: Evidence from the UK," Energy Policy, Elsevier, vol. 61(C), pages 1422-1431.

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