Tories dismiss talk of green tax retreat

The Conservative Party has dismissed reports that it is considering watering down its green tax proposals, insisting that there are still "very strong economic arguments" for shifting tax burdens from work and investment towards pollution.

Last week, reports in the Guardian newspaper citing anonymous sources within the party claimed shadow chancellor George Osborne was preparing to downgrade green tax plans over fears they will prove difficult to sell to the electorate during a recession.

The news was criticised by TUC general secretary Brendan Barber, who claimed that any moves to water down green proposals were a "big mistake".

"The environmental sector is a huge growth area for other countries and will continue to be so over coming decades," he said. "The UK needs to be part of that global market if it is to pull itself out of recession."

However, a spokesman for Mr Osborne's office dismissed the reports, insisting that the Tories remained committed to their stated green tax proposals and as a government, would aim to raise the proportion of total tax revenues that come from environmental taxes.

"There are very strong economic arguments for shifting the burden of taxation away from work and investment and towards pollution," he said. "Environmental taxes can play an important role alongside emissions trading schemes and sensitive regulation in tackling climate change."

He added that alongside proposals for green ISAs, the Tories had outlined plans to replace the current Climate Change Levy with a Carbon Levy designed to better incentivise investment in low carbon as well as renewable energy. The party is also committed to replacing the government's aviation duty with an air pollution tax that should encourage airlines to operate fuller, more efficient aircraft.

The spokesman also said that any environmental taxes proposed by the Conservatives would be balanced by tax cuts in other areas, so as to challenge the perception that green taxes are used by governments as "stealth taxes".

"Any additional revenues [from green taxes] will go into an independently audited Families Fund that can only be used to reduce other taxes on families," he explained. "That means no more stealth taxes dressed up as green taxes."

Meanwhile, Gordon Brown has hinted that measures to help stimulate the economy through the creation of new green collar jobs could form part of next week's pre-budget report.

In a speech at the Council on Foreign Relations in New York, the prime minister signaled that alongside targeted tax cuts for low earners, the expansion of the cleantech sector could form a key part of the UK's economic stimulus package.

"Green technology could be what IT was in the 1990s – a big growth area," he said.