Government urged to commission a review of environmental taxes


By Daniel Hunter

With the coalition Government committed to raising the proportion of revenue from environmental taxation, the CBI is today (Friday) publishing a new report calling on the Government to undertake an independent review of its existing environmental tax landscape.

In a separate response to the Department of Energy and Climate Change’s (DECC) Consultation on a Simplified CRC Energy Efficiency Scheme, it also urges the Government to scrap the Carbon Reduction Commitment (CRC) and implement mandatory carbon reporting.

The CBI carried out in-depth interviews with over 70 of its members for a new report, Solving a Taxing Puzzle: Making environmental taxes work for business, and found that firms believe environmental taxes can help stimulate business investment, drive private sector growth and reduce the environmental impact of business activity.

The use of environmental taxation has been steadily increasing since the mid-1990s, from just four taxes in 1989, to 12 in place today, raising £43.4bn in 2010/11. This represents almost 8% of total tax revenue.

The CBI’s research shows some individual taxes have been successful — both Landfill Tax and Vehicle Excise Duty are well regarded. But others, particularly Air Passenger Duty (APD) and the Carbon Reduction Commitment (CRC), are viewed much more negatively.

The survey makes clear that businesses have become disillusioned with the current environmental tax landscape, believing the combination of taxes do not work well together, are unnecessarily complex and are a drag on business competitiveness.

Ian McCafferty, CBI Chief Economic Adviser, said:
“With the number of environmental taxes on the increase and proving to be a major revenue raiser for Government, it’s essential that we take stock of the successes and failures from a business perspective.

“Well-designed, environmental taxes can be a useful tool to help firms improve their environmental performance and unlock significant business investment. However, poorly planned environmental taxes have damaged businesses and... continued on page two >


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