Carbon Budget does not go far enough

The chancellor may have announced the world’s first carbon Budget last week,
but critics say his statements were more interesting for what they left out
rather than what they included.

Frank Sangster, head of environment and tax incentives at KPMG, said: ‘One of
the biggest things to come out of the first Carbon Budget is what is not in it.’

What the Carbon Budget revealed was how the government plans to invest in
renewable energy. What was missing was any idea of how improved environmentally
friendly habits would be incentivised through taxation – something the experts
believe is essential.

‘There are no new taxes and the chancellor is not trying to change the
behaviour of businesses through tax penalties or incentives.’

Richard Gledhill, head of climate change and carbon market services at
PricewaterhouseCoopers, agrees adding: ‘People recognise that action needs to be
taken on climate change. Most companies want regulation to be lifted, but with
climate change, companies and practices understand that it is needed.’

The Carbon Budget did, however, make changes to how cars will be taxed in the
future, with a significant change in carbon thresholds related to tax payments.

‘There is a sting for company employees that take company cars in the form of
an £85m increase in their tax bill, following a change from April 2011 in the
carbon emissions thresholds’ adds Sangster.

As from 6 April 2011 discounts on tax for cars that emit lower volumes of
carbon, such as Euro 4 diesel cars or hybrid vehicles, will have the discounts
abolished in favour of a tax system that rewards lower emission vehicles.

More detail is expected from the government in the summer when it publishes
its energy and climate change strategy.

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