TaxPersonal TaxCosts set to rocket under climate levy

Costs set to rocket under climate levy

UK production costs have risen only 0.5% during April. But had the Climate Change Levy been included they would have risen by almost 1%.

The CCL was introduced to the UK economy in April 2001 but was not included in the latest Producer Price Index, released by the National Statistics Office.

A report supplied by the NSO showed the price of all manufactured products had risen by 0.5% in April 2001, year-on-year, the sixth successive month the rate of inflation had fallen.

The impact of the CCL, however, could place a significant burden on manufacturers, who are already struggling to compete with their European rivals.

A Customs & Excise model estimated the highly controversial levy would add 0.9% to the cost of materials and fuels used in production over the next 12 months, pushing up the price of manufactured products. This increase included discounts negotiated with various individual groups of users.

The NSO tempered this analysis by saying that a degree of uncertainty existed over the impact of the levy, but it said it hoped to embed CCL in its next series of PPI data.

The CCL taxes companies that supply electricity, natural gas, petroleum, coal, lignite and various forms of coke to a range of UK industries, and is calculated on the number of energy units produced. Unlike VAT, it is not refundable.

It has been bitterly opposed by such business groups such as the Confederation of British Industries and the Engineering Employers Federation.

Commenting on Customs’ estimation, Digby Jones, director-general of the CBI, told the Times: ‘This adds to fears over the impact of the levy on manufacturing competitiveness.’

Martin Temple, director-general of the EEF, said the effects of CCL would prove ‘highly damaging’.

Links

CCL a ‘blunt tool’ claims green consultants

EEF says climate tax will harm UK plc

Checklist: Customs CCL relief notes

Corus faces £8m bill from climate levy

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