CBI forges an unlikely green alliance

FORMING AN unlikely alliance, the Confederation of British Industry and Friends of the Earth yesterday declared themselves in favour of environmental taxes. Not surprisingly, the industrialists were more cautious than the green pressure group.

Their statements came just days before a Budget in which Chancellor Gordon Brown is expected to give a further nudge to anti-pollution taxes. Petrol prices will rise well above the rate of inflation, and it is thought that the tax break for company cars will be curbed.

In a consultation paper, the CBI said it had no objection in principle to eco-taxes or tradable permits - a system yet to be tried out in Britain in which companies are issued with permits entitling them to spew out a certain quantity of pollution.

They can then trade these permits between themselves at a price established in a free market. Companies which find it cheap and easy to curb pollution can sell permits to those which do not.

The CBI says any extra revenue raised by eco-taxes must be offset by cuts in other taxes on firms and households. It rejects the idea that pollution taxes are justified in order that taxes on employment and income should be cut. The prime reason for any eco-tax must be to curb a particular type of pollution.

BP's chief economist, Professor Peter Davies, chair of the group which drew up the paper, said: ``Business wishes to play its part in ensuring a clean environment as efficiently and effectively as possible.''

Meanwhile, Friends of the Earth unveiled radical budget proposals including a 9 per cent rise in petrol duty and a tax on non-residential private car parking spaces which would raise pounds 400m a year.

These and other taxes, along with cuts in the roads programme, would allow a big expansion in energy-saving measures for low-income and pensioner households and a 3-per-cent cut in employers' National Insurance contributions.

FoE's director, Charles Secrett, said: ``This is truly the Chancellor's last chance to deliver on his environmental promises.''