THE TREASURY has published a long-awaited definition of an “environmental tax” following months of industry calling for clarification.
In June, the Confederation of British Industry called on the government to undertake an independent review of existing green taxes and clarify what was deemed an environmental tax – this is in addition to the government’s own Environmental Audit Committee also calling for a definition.
There are three requirements an environmental tax must meet: to directly link to the government’s green objectives (such as the energy-related CRC tax, which is used to reduce and report carbon in the largest organisations); to encourage positive behaviour (such as the increase in landfill tax which stands at £64 per tonne and £72 per tonne in 2013 and £80 per tonne in 2014); and to raise tax rates for more polluting behaviour (such as the EU Emissions Trading Scheme, which charges companies according to how much carbon they emit).
According to HM Treasury the following taxes are deemed “environmental”:
CRC Energy Efficiency Scheme
EU Emissions Trading Scheme
Climate Change Levy
Carbon Price Support
However, vehicle excise duty (VED), fuel duty and air passenger duty are not deemed environmental taxes.
The lack of definition had previously caused confusion as the 2010 Office of National Statistics environmental accounts included fuel duty, VED and air passenger duty.
The UK, along with several other nations, has been trying to encourage better environmental behaviour with added green taxes.
The government has pledged to make the UK the greenest government and has said it hopes to double revenues from this line of taxation. The Office of Budget Responsibility said it expects green taxes to double by 2015-16 to £6.6bn from £3.1bn predicted for 2012/13.
Economic secretary to the Treasury Chloe Smith said: “[The] announcement is an important step in meeting the government’s commitments on environmental tax, and our broader determination to be the greenest government ever.
“…Through ambitious policies such as the Carbon Price Floor, this government is already on track to double the proportion of environmental tax revenue by the end of the parliament.”
Committee expresses concern about costs to businesses and April 2018 implementation date
Andrew Tyrie airs views on the Finance Bill, 'Making Tax Policy Better' report, and Brexit
Top 25 firm HW Fisher & Co has acquired London firm Rhodes & Rhodes
Top Ten firm RSM has appointed Nick Blundell as its head of corporate tax in Birmingham