Miliband calls on Chancellor to devise new menu of eco-taxes

A multi-million pound menu of eco-taxes, including incentives to buy environmentally friendly washing machines and lightbulbs, has been proposed by David Miliband, the Environment Secretary, in a confidential memo to the Chancellor of the Exchequer.

The letter to Gordon Brown includes measures to limit car use and ownership with a "substantial increase" in road tax to reduce carbon emissions. The minister also calls for a "pay-per-mile pollution tax" on motorists and one on household waste.

The leaked letter says: "Differential charging for waste at household level can have a significant role to play." It adds that household appliances that use too much energy should cost more than those designed to help the environment.

"The prices on retailers' shelves do not reflect true environmental costs, and consumers do not always buy cost-effective, energy- efficient goods," the letter says.

The Environment Secretary also calls for a landfill tax paid by local councils and businesses that bury refuse to go up from £21 to £75 a ton.

The document also proposes taxing motorists with a special mechanism to get extra fuel tax whenever oil prices fall.

Air travel may also be taxed more heavily with air passenger duty raised by £5.

"There is also a case for making flights subject to VAT either on domestic flights or better still for all EU flights," the letter says.

The Environment Secretary's proposed eco-tax package will throw down the gauntlet to the Tories who have yet to spell out in detail financial measures to help the environment.