Partner Article

Environmental tax definitions benchmark future development

A new definition of environmental taxes has been published by the Government, aiming to encourage effective policy making and measurement of progress of the Coalition’s revenue targets.

In a statement from the Treasury, environmental taxes are grouped under three key principles, including: tax explicitly linked to the Government’s environmental objectives; the taxes’ are designed to encourage positive behaviour change; and the tax is structured in relation to environmental objects.

Climate Change Levy, Aggregates Levy, Landfill Tax, EU Emissions Trading System (EU ETS), Carbon Reduction Commitment Energy Efficiency Scheme and Carbon Price Support have all be identified as defined environmental taxes.

The independent Office of Budget Responsibility currently forecasts the proportion of revenue from these taxes doubling by 2015-16.

Economic Secretary to the Treasury Chloe Smith said: “By setting out a clear, usable definition of what a green tax actually is, people will be able to judge us against the Coalition Agreement pledge.

“Indeed, 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.

“We want a clear approach that delivers a positive environmental impact without adding burdens on to business or households.”

Jayne Harrold, environmental tax specialist, PwC commented: “There’s no doubt that the increase in vehicle excise duty and the rising cost of fuel in particular has probably contributed to more energy efficient decision making by consumers, but whether that is environmentally motivated is another thing.

“The definition of environmental taxation is significant if this is more than an exercise in statistics. It could be a helpful platform for use by government to establish a clear environmental tax policy to help meet its green commitments.

Richard Gledhill, partner, sustainability and climate change, said: “By itself, the definition of green taxes isn’t going to provide a new boost to the green economy. But it will provide a benchmark against which to judge future changes.

“Carbon pricing in the UK is set to ratchet up, come what may, because of the carbon price floor. So companies really do need to take energy efficiency seriously. Higher carbon pricing means higher electricity prices, for business and the consumer.

This was posted in Bdaily's Members' News section by Tom Keighley .