Plan to extend green tax to quarries

The Chancellor promised a serious look at the case for new taxes on quarrying and water pollution in time for his next Budget in the Spring.

But it failed to deliver on a pre-election promise that Labour in power would publish a "green book" with each budget, setting out the environmental impacts of its financial policies.

The quarrying industry lost no time in starting its campaign against a quarrying tax. Last night Jerry McLoughlin, the Quarry Products Association's economist, pointed out that 40 per cent of all the purchases of sand, rock and gravel were ultimately made by local councils or central government. Any revenue raised by the tax would thus be largely offset.

"Our products are used to make schools, hospitals and housing - things the Government says are desirable, and we think there's no overall justification for a quarrying tax," he said.

The industry extracts 215 million tonnes of material a year, costing from pounds 2 to pounds 8 a tonne. It would be hard to see the tax raising more than a few hundred million pounds a year at most, but several environmental groups are strongly in favour of it. The tax would encourage recycling of materials from demolition and repair work, reduce the amount of countryside being dug up each year and possibly cut the movement of lorries carrying quarried material.

Industry in Britain is already charged for water pollution by the Government's environment agencies, one covering Scotland and the other England and Wales. These charges vary according to the toxicity and quantity of the pollution, but they only cover the agencies' costs in carrying out its regulatory task.

What the Treasury and the Department of the Environment are now going to look into are further, higher charges aimed at forcing manufacturers, processors and water companies to look into how they can further cut environmental harm. According to the Environment Agency, nearly 2,500 miles of river in England and Wales is classed as "poor" or "bad", although water quality has been improving.

The Treasury also released a brief statement of intent on environmental taxation yesterday, which said that "just as work should be encouraged through the tax system, environmental pollution should be discouraged ... over time the Government will aim to reform the tax system to increase incentives to reduce environmental damage." But the statement goes on to say that green taxes must not hurt Britain's international competitiveness or penalise poor people.