Tài liệu ENVIRONMENTAL TAXATION LAW doc

ENVIRONMENTAL TAXATION LAW

To Angela, Caroline and Amelia

Environmental Taxation Law

Policy, Contexts and Practice

JOHN SNAPE

School of Law, University of Warwick, UK

and

JEREMY DE SOUZA

Consultant to White and Bowker, UK

© John Snape and Jeremy de Souza 2006

All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted in any form or by any means, electronic, mechanical,

photocopying, recording or otherwise without the prior permission of the publisher.

The authors hereby assert their moral rights to be identified as the authors of the

work, in accordance with the Copyright Designs and Patents Act 1988.

Published by

Ashgate Publishing Limited Ashgate Publishing Company

Gower House Suite 420

Croft Road 101 Cherry Street

Aldershot Burlington, VT 05401-4405

Hants GU11 3HR USA

England

British Library Cataloguing in Publication Data

Snape, John

Environmental taxation law : policy, contexts and practice

1.Environmental impact changes - Law and legislation -

Great Britain

I.Title II.De Souza, Jeremy

344.4'1046

Library of Congress Cataloging-in-Publication Data

Snape, John.

Environmental taxation law : policy, contexts and practice / John Snape and

Jeremy de Souza.

p. cm.

Includes bibliographical references and index.

ISBN 0-7546-2304-1

1. Environmental impact charges--Law and legislation--Great Britain. 2.

Environmental impact charges--Law and legislation. I. De Souza, Jeremy. II.

Title.

KD3382.E58S63 2005

344.4104'6--dc22

2005048265

ISBN 0 7546 2304 1

Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall.

Ashgate website: http://www.ashgate.com

Contents

About the Authors xi

Authors’ Preface xiii

Table of Cases xvii

Table of Statutes xxv

Table of Statutory Instruments li

Table of Provisions of the European Treaty lxv

Table of European Community Legislation lxix

Table of Provisions of GATT 1994 lxxxi

Table of Other Treaty Provisions lxxxiii

Table of Abbreviations lxxxvii

PART I: PROLOGUE

1 Preliminaries 3

1.1 Introduction 3

1.2 Terminology, approach and sources 5

1.3 International, European, national and regional contexts 19

1.4 Regulatory and taxation contexts 21

1.5 Institutional framework 34

1.6 Scheme of the book 34

2 Regulated Sectors 37

2.1 Introduction 37

2.2 Trade associations, policy-makers and pressure groups 38

2.3 Waste management industry 40

2.4 Energy industries and consumers 42

2.5 Mineral extraction industry 50

2.6 Air passenger and road freight transport sectors 51

2.7 Concluding remarks 53

PART II: POLICY AND CONTEXTS

3 Introduction to Part II 57

4 Institutional Framework 63

4.1 Introduction 63

4.2 Institutions of central, regional and local government 63

4.3 European Union institutions 92

4.4 International institutions 101

4.5 Concluding comments 106

vi Environmental Taxation Law

5 Technical Justifications 109

5.1 Introduction 109

5.2 Sustainable development 110

5.3 Taxation and sustainable development 112

5.4 Economic instruments and market failures 115

5.5 The efficient level of fiscal intervention 120

5.6 Concluding remarks 122

6 Regulatory Context 125

6.1 Introduction 125

6.2 Integrated Pollution Control, Integrated Pollution Prevention and

Control and Environmental Assessment 127

6.3 Waste management regulation 134

6.4 Control of air and atmospheric pollution 144

6.5 Air passenger and road freight transport regulation 159

6.6 Regulation of mineral extraction 161

6.7 Regulation of contaminated land 161

6.8 Concluding comments 162

7 Taxation Context 163

7.1 Introduction 163

7.2 Taxes and tax subsidies 164

7.3 Status of the main levies and subsidies under consideration 176

7.4 Concluding comments 182

8 International Aspects 183

8.1 Introduction 183

8.2 Public international law 184

8.3 International environmental law 191

8.4 International trade law 200

8.5 International air transport law 221

8.6 International energy law 222

8.7 Concluding remarks 223

9 Conclusions on Part II 225

PART III: PRACTICE

10 Introduction to Part III 231

Part III, Section A: Environmental Levies and Other Economic Instruments

Division 1: General

11 Design and Implementation 237

11.1 Introduction 237

11.2 Regulatory impact assessment 238

Contents vii

11.3 Design and implementation of the two post-1997 taxes 240

11.4 Review of landfill tax 248

11.5 Concluding comments 250

12 Community Law Aspects 251

12.1 Introduction 251

12.2 Regulatory aspects 253

12.3 Taxation aspects 293

12.4 Rules on free movement of goods 303

12.5 Concluding comments 305

Division 2: National Taxes

13 Aggregates Levy 309

13.1 Introduction 309

13.2 Operation of the tax 310

13.3 Problems caused by the legal structure 312

13.4 Meaning of ‘aggregate’ 315

13.5 The concept of ‘exempt processes’ 316

13.6 Administration of the levy 316

14 Climate Change Levy 317

14.1 Introduction 317

14.2 Tax base and rates 318

14.3 Reduced rates 319

14.4 Exemptions 319

14.5 Combined heat and power and renewable source electricity 321

14.6 Climate change agreements and the UK Emissions Trading

Scheme 324

14.7 Administration of the levy 327

15 Landfill Tax 329

15.1 Introduction 329

15.2 Tax base and rates 329

15.3 Securing the tax base 331

15.4 Exemptions 333

15.5 Temporary disposals 335

15.6 Fly-tipping 335

15.7 Administration of the tax 337

16 Customs’ Administrative Model 339

16.1 Introduction 339

16.2 Registration 339

16.3 Deregistration 341

16.4 The form of registration 342

16.5 The problem of trusts 343

16.6 Groups, divisions and going concerns 344

viii Environmental Taxation Law

16.7 Non-UK residents 346

16.8 Site registration 347

16.9 The credit concept 348

16.10 Bad debt relief 350

16.11 Transitional provisions 351

16.12 Record keeping and inspection 352

16.13 Disputes 352

16.14 Irregularities 353

16.15 Enforcement 353

16.16 Problems for landowners 354

Division 3: Local Levies

17 Workplace Parking Levies 361

17.1 Introduction 361

17.2 Changes in planning practice 362

17.3 Double payment 362

17.4 Metropolitan schemes 363

17.5 Other schemes 363

17.6 Those subject to schemes 364

18 Road User Charging Schemes 365

18.1 Introduction 365

18.2 Central London 365

18.3 Other cities 368

18.4 Metropolitan schemes 369

18.5 Other schemes 369

Division 4: Other Economic Instruments

19 The Packaging Regime Route 373

19.1 Introduction 373

19.2 Packaging 374

19.3 Choice 375

19.4 Registration 375

19.5 Obligations once registered 375

19.6 Waste disposal obligations 377

19.7 The future of packaging waste recovery notes 378

20 Emissions and Waste Trading Schemes 381

20.1 Introduction 381

20.2 Design and implementation of the UK Emissions Trading Scheme 381

20.3 Subsequent development of the UK Emissions Trading Scheme 383

20.4 Operation of the UK Emissions Trading Scheme 389

20.5 The regime applicable to direct participants 390

20.6 Green Certificate trading 391

20.7 Landfill Allowances Trading Scheme (‘the LATS’) 392

Contents ix

Division 5: The Instruments in Operation

21 Policies in Practice (1) 397

21.1 Introduction 397

21.2 The employment ‘double dividend’ 397

21.3 Hypothecation, ‘recycling’ of revenue and tax subsidies 399

21.4 Political and industrial aspects 406

21.5 The Renewables Obligation 423

21.6 The 2003 Energy White Paper 425

21.7 Problems with electricity supply industry structures 433

21.8 The case of aggregates levy 436

21.9 Water and the farmers 441

21.10 The effect of Community law and policy 449

Part III, Section B: Greening the UK Tax System

Division 1: Removing Subsidies and Creating Incentives

22 Excise Duties 457

22.1 Introduction 457

22.2 Motor cars and their fuel 457

22.3 Heavy goods vehicles and their fuel 462

22.4 The emissions problem 463

23 Employee Taxes 465

23.1 Introduction 465

23.2 Income tax treatment of company cars 465

23.3 Environmentally-friendly transport 467

24 Business Taxes 469

24.1 Introduction 469

24.2 Nature and role of capital allowances 469

24.3 Motor cars 470

24.4 Environmentally-friendly equipment 470

24.5 Urban regeneration 471

24.6 Private residential landlords 472

24.7 Emissions trading scheme corporation tax and VAT treatment 473

24.8 Direct tax treatment of environmental trust contributions 475

Division 2: The Provisions in Operation

25 Policies in Practice (2) 479

PART IV: PROSPECTS AND NEW DIRECTIONS

26 Environmental Taxes and the Tax Base 483

26.1 Introduction 483

x Environmental Taxation Law

26.2 The consolidation of the tax base 485

26.3 The future of non-property-based taxes in the internet world 487

26.4 International trade treaty problem for federations and economic

areas 492

26.5 Employer’s national insurance contributions 494

26.6 The advantage of environmental taxes 495

26.7 European Union limitations 496

27 Government Proposals 499

27.1 Introduction 499

27.2 Economic instruments and housing development 500

27.3 Road pricing for heavy lorries 501

27.4 Nationwide satellite-based congestion charging 503

27.5 Pricing air passenger transport 504

27.6 Litter taxes 508

27.7 Taxing incineration 509

27.8 Conclusions 510

28 The EU Emissions Trading Directive 513

28.1 Introduction 513

28.2 Background to the EU Emissions Trading Directive 514

28.3 Provisions of the EU ETS Directive 525

28.4 Transposition of the EU ETS Directive into UK law 529

28.5 Developments since transposition of the EU ETS Directive 532

28.6 Concluding observations 534

PART V: PROVISIONAL ASSESSMENT

29 The Current State of Play 537

29.1 The problem of measuring success 537

29.2 How do the UK taxes measure up to this standard? 537

29.3 Success stories 542

29.4 Comparing 1997 with 2004 542

Postscript 545

Select Bibliography 551

Index 557

About the Authors

Jeremy de Souza was educated at Charterhouse and New College, Oxford. Articled

to Mr John Emrys Lloyd of Farrer & Co, he subsequently became an assistant

solicitor and associate at that firm. Between 1976 and 1996, after which he became

a consultant (enabling him to devote more time to writing), he was the firm’s tax

partner. During his 32 years with the firm, he contributed to the newsletters for the

Agricultural Estates Group, the Employment and Pensions Group, the Charities

Group and the Briefing Service for in-house lawyers.

In 1999, he became a part-time consultant to White and Bowker in Winchester, and

has contributed to that firm’s newsletters: The Law of the Land, W&B Charity Law,

Private Client Newsletter and Ins and Outs.

He was a member of The Law Society Revenue Committee’s Corporation Tax Sub￾Committee between 1989 and 1992. Since 1995, he has been the Chairman of the

Holborn and, from 2001, City of Westminster and Holborn, Law Society’s Revenue

Committee, writing a monthly article in the monthly journals, Holborn Report and

The Report.

In 1969, he was a co-author of Reform of Taxation and Investment Incentives. He

was a contributor to Volume 35 of The Encyclopedia of Forms and Precedents (Sale

of Land) in 1989. He was co-author of The Property Investor and VAT in 1990 and

of The Conveyancer’s Tax Primer in 1999. Since 1991, he has been the General

Editor of the Sweet and Maxwell looseleaf, Land Taxation. Since 2001, he has been

a contributor to The Lawyer’s Factbook.

He has contributed articles to The Law Society’s Gazette, STEP Journal, Private

Client Business, The British Tax Review, Taxation, The Tax Journal, The Estates

Gazette, Property Law Journal, Rural Practice, The Environmental Law Review, Trust

Law & Practice, Trusts & Estates Tax Journal, Hampshire Chronicle, Negotiator,

Butler & Co Farming News, Christie’s Bulletin and The Investor’s Chronicle. He has

also lectured on tax topics.

In addition to being a solicitor, he belongs to the Society of Trust and Estate

Practitioners, the Stamp Taxes Practitioners Group and the Royal Institute of

International Affairs.

John Snape was educated at St Mary’s College, Blackburn, and St Edmund Hall,

Oxford. He qualified as a solicitor in 1989 and subsequently worked in corporate

and commercial legal practice. In 1993, he joined Nottingham Law School, the

Nottingham Trent University, moving to the University of Leeds in 2002. In 2005,

he took up a lectureship at the School of Law, the University of Warwick. He has

written on a range of legal topics, including property law and tax law.

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Authorsʼ Preface

During the last seven years or so, the government of the United Kingdom has

embarked on a range of far-reaching social and economic reforms. Among these,

none is more striking, especially to those who have followed its development, than

the enterprise of environmental taxation.

The use of a tax, for long regarded as a means of raising government revenue,

redistributing wealth or of managing the economy, in order to discourage certain

forms of undesirable industrial behaviour, had no systematic antecedent in UK law

prior to 1997. Of course, there had for centuries been duties on cigarettes, petrol

and alcohol, but no tax, not even landfill tax, introduced in the dying days of Prime

Minister John Major’s government, had been researched and designed specifically

to steer the behaviour of those liable to pay it. True, landfill tax had attempted to

put a price on the environmental costs of landfilling waste but, except to a slight

extent, it had not been intended, when originally designed and implemented, to steer

behaviour. By contrast, the two main taxes introduced after 1997, climate change

levy, which is a tax on the industrial, commercial and agricultural consumption of

non-environmentally-friendly forms of energy, and aggregates levy, a tax on the

extraction of minerals, have been specially designed, via their structures and rates, to

encourage the use of alternative resources. This is not the only way in which, if the

reader will forgive the pun, these environmental taxes have been groundbreaking.

The other way in which they have marked a departure, which the authors regard as

highly characteristic, is their use in combination with other economic instruments,

such as trading schemes, green certificates, road and cordon pricing and special

reliefs within non-environmental tax codes.

All of the factors just rehearsed explain the book’s title. We cannot, against the

policy background outlined above, treat of environmental taxes in isolation from

the other instruments which are designed to complement them. So the range of

instruments involved is not the least of the contexts envisaged by the title. However,

we have tried to look for other contexts, primarily legal ones, which will help us to

explain the various aspects of environmental taxation more usefully. As an energy

tax, climate change levy is imposed on gas and electricity supplies. Both the gas

supply industry and the electricity supply industry are sectors of extreme technical

complexity, as a result of their privatisation, in another characteristic adventure, this

time of a decade or more ago and a different government. Grafting climate change

levy onto these post-nationalisation structures, without a consistent energy policy,

has contributed to producing a tax of such extraordinary complexity that it would be

impossible to appreciate its subtleties without a knowledge of ‘what lies beneath’.

So discussions of the post-nationalisation energy sector structures and regulation

have been included as well as environmental regulation and tax law. Again, since

the regulation of air transport and road freight transport affects plans to introduce

new airline taxes, emissions trading schemes and road pricing schemes, we have

xiv Environmental Taxation Law

also included a brief discussion of how these sectors are structured and regulated. In

every case, we seek to provide, not just a UK context for the material but an EU-wide

and international one also. We hope, as a result, that this book will be no less useful

to the overseas reader than to the UK one.

This brings us to another set of contexts: the European Union and international

governance structures within which the UK’s economic instruments for environmental

protection have been designed and implemented.

The more obvious governance structure is the EU one, since the EU’s institutions

– notably the European Commission – provide both the impetus for action at national

level, via the Sixth Environmental Action Programme, and the terms on which that

action can be taken, via the European Treaty and the legislation made thereunder.

Finding the right level of governance is an important question with economic

instruments. In its enthusiasm to introduce emissions trading, partly as a sweetener to

sectors already hit both by Integrated Pollution Prevention and Control and climate

change levy, the government managed, with the UK Emissions Trading Scheme, to

turn, in Sorrell’s words, an ‘early start into a false start’. This is because the period

of the last 18 months to two years has also seen the creation of the EU Emissions

Trading Scheme, under which carbon dioxide emissions will be capped, parcelled

out and traded among all the Member States of the enlarged Union. The government

claims that the UK scheme, set up in 2002, will be good practice for the EU scheme,

due to commence in January 2005. Its detractors claim that the UK scheme was an

irrelevance, nonsensically unilateral and designed simply to buy off opposition to the

government’s environmental policy from sectors most badly hit by climate change

levy and IPPC. At the very least, there is a measure of over-regulation.

Although less obvious, governance is also felt at the international level, via the

United Nations-sponsored 1992 Framework Convention on Climate Change, and

its 1997 Kyoto Protocol, as well as the rules of the WTO/GATT 1994-based system

of multilateral agreements on international trade. Both the EU itself and its Member

States are parties to both sets of agreements. Although there are signs that the position

may be changing, the values of the latter, which have governed international trade

at least since the mid-twentieth century, may be difficult or impossible to reconcile

with those of the former, whose values are, of course, much newer. The influence

of Kyoto is to be felt, not only in the creation of the two emissions trading schemes

referred to above, each of which take Kyoto as their inspiration, but also in the design

of environmental taxes. Climate change levy, an energy tax, neatly sidesteps design

problems created by GATT 1994’s concept of the border tax adjustment and, in doing

so, may sacrifice something of its environmental effectiveness.

The trade-off just referred to is, of course, a matter of political judgement. No less

characteristic of the UK’s environmental taxes and other economic instruments than

their regulatory context and their place within European and international governance

structures are the political choices they represent. These are shown both in present

political compromises and in the political possibilities for the future. Lord Butler

memorably described politics as ‘the art of the possible’. Whether the structuring of

climate change levy as a downstream energy tax owed more to fear of the political

consequences of taxing domestic energy consumption and alienating what remained

of the coal industry, than it did to economic and environmental principles, is a matter

for historians to debate. The authors have some well-founded suspicions on these