LETTER: System that makes it cheaper to pollute than to conserve

From Mr Andrew Warren

Sir: I fear that only deaf ears will greet Hamish McRae's clarion call to our government to alter the taxation system to penalise the profligate use of resources. Certainly that has been the present Chancellor's response to the complaint of the energy-efficiency industry that our product is taxed at more than twice the rate of the fuel it is intended to save.

VAT is levied on energy saving at 17.5 per cent. That on fuel is at 8 per cent. This is, as the former chancellor Norman Lamont said in his 1993 Budget speech, an "anomaly which makes a nonsense of any attempt to use the taxation system to improve the environment". Even still, the distortion remains.

If the Treasury refuses to make even this minor adjustment, what likelihood is there of any substantial changes taking place?

Yours faithfully,

Andrew Warren

Director

Association for the Conservation of Energy

London, N1