TaxCorporate Tax‘Inept’ eco tax slammed

'Inept' eco tax slammed

Business leaders have hit out at the 'flawed design' of the government's new energy tax, which they claimed hits the competitiveness of half UK's manufacturers.

The Confederation of British Industry and the Engineering Employers Federation claimed the levy had left some companies with huge tax bills while others were better off, regardless of whether they have taken steps to improve energy efficiency. ‘A laudable objective has been tarnished by inept implementation,’ Digby Jones, CBI Director-General said.

The levy is intended to encourage firms to use energy more efficiently, with revenues mainly returned to businesses through reduced national insurance contributions.

But the CBI report showed the manufacturing sector had paid out an extra #143m in the first year of the tax, with 57% saying they were less competitive as a result.

Jones said: ‘This survey shows the climate change levy is damaging key sectors of the UK economy and driving jobs abroad – it’s crazy to pile on extra costs when manufacturers are struggling to remain competitive, and all employers are bracing themselves for next April’s NIC increase.’

His criticisms were supported by the LibDems Vincent Cable, the party’s trade and industry spokesman said: ‘The levy must be replaced by a proper carbon tax which would apply across the board on energy raw materials and be related to the amount of carbon dioxide they create. Businesses would choose a carbon tax over the flawed climate change levy.’

The EEF was equally damning of the new tax. Director-general Martin Temple, said: ‘To continue with the climate change levy as currently designed makes a mockery of any commitment to support manufacturing and, with over half of firms less competitive as a result of this tax.’

He added that it was a ‘bitter irony’ that the tax was not delivering the intended energy improvements.

Both the EEF and the CBI called for a freeze on the levy and wider access to climate agreements to give more firms the means and motivation to increase energy efficiency.

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