CBI calls on Chancellor to reform environmental taxes
22/02/2012
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CBI Director-General John Cridland
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The CBI is today (Wednesday) calling on the Chancellor to provide “more simple, coherent and well-defined” environmental taxes in next month’s Budget.
In its submission to the 2012 Budget, the Confederation of British Industry (CBI) is urging George Osborne to replace the Carbon Reduction Commitment (CRC) with an increased Climate Change Levy (CCL).
Launched in 2008, the CRC aims to significantly reduce carbon emissions and drive energy efficiency in the UK’s most energy intensive sectors.
In a letter to the Chancellor, John Cridland, CBI’s Director-General, said: “The CRC as it now stands does not deliver an effective and proportionate mix of the financial, reputational and reporting drivers required, adding complexity and confusion when businesses desperately need simplicity and clarity.”
In an accompanying submission, the CBI said: “Removing the revenue recycling element [from the CRC] has undermined the scheme and the muted response to the performance league table calls its effectiveness as a reputational driver into question.”
It is proposing to replace the CRC with an increased CCL – the tax on energy products such as electricity, gas and coal - and mandatory carbon reporting.
The submission said a reformed CCL would ensure the Treasury “would be able to protect the CRC revenue stream – vital for repairing the public finances – while removing the unnecessary admin burden upon business.”
While the CBI recognised the importance of green taxes, they said “the current environmental tax landscape does not always maximise the potential benefits to either growth or the environment.”
The Confederation also reaffirmed its strong opposition to the Europe-wide Carbon Tax, proposed in the draft Energy Taxation Directive (ETD).
It said that as EU member states are already working towards binding targets in 2020, changes to the ETD would “reduce the ability of member states to choose the measures most appropriate to their circumstances to reach 2020 targets.”
The successful delivery of the Green Deal also featured in the CBI’s recommendations to the chancellor.
Mr Cridland said: “The CBI believes that some form of incentive will be needed to attract early adopters to the scheme, and therefore welcomes the £200million allocated by HM Treasury in the 2011 Autumn Statement for this purpose.
“A sensible approach would be to create an incentive similar to the boiler “scrappage” scheme in 2010.”
Commenting on the proposals, Ian McCafferty, CBI Chief Economic Adviser, said: “We should ensure our tax system encourages rather than stifles private sector investment through better use of capital allowances. We also need to encourage innovation through our tax system, and design environmental taxes which promote sustainable, value-added growth.”
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