Environmental Taxes in the Uk
Environmental Taxes in the UK | BEA2002 Group Report Assignment | Ben Dance, Liwei Rao, Qi Gao, Nellie Ho and Ahmed Mujtaba |
1. Introduction
1.0 We have been commissioned by the government to write a report on how the current UK tax system encourages taxpayers to behave in an environmentally friendly manner. In the first part of the report we will look at three elements of the UK system and outline how they encourage environmentally friendly behaviour and in the second part we will compare these elements to measures in place in Sweden.
2. Key Elements of the UK Tax System
2.1 Climate Change Levy
2.1.1CCL is a tax on the supply of energy to businesses in the commercial, agricultural and industrial sectors. The tax, introduced in April 2001, works by charging for each unit of energy used therefore the more energy used the more tax a business has to pay. It’s an arbitrary way of trying to get businesses to reduce the energy they use and the emissions they produce. The charge per unit of energy varies depending on the commodity used and the pollution that the commodity produces. For example, electricity has a higher rate of charge (0.509 pence per kilowatt hour) compared to gas (0.177 pence per kilowatt hour) because it is more damaging to the environment (HMRC, 2013).
2.1.2 The government claims the CCL has had a significant impact on reducing the emissions produced by the UK. However, the House of Commons Environmental Audit Committee has an alternate view that the reductions are due to other measures already in place. They believe that the CCL rates are not significant enough to influence behaviour (CIOT, 2009). Another argument suggests that businesses are just passing on the tax by increasing their prices leaving the incidence of the tax with the consumers. If we look at the tax revenues from CCL, we can see that it has never reached its annual target of £1 bn, suggesting the tax is ineffective (Annie Reece, 2012).
2.1.3 In support of the
1. Introduction
1.0 We have been commissioned by the government to write a report on how the current UK tax system encourages taxpayers to behave in an environmentally friendly manner. In the first part of the report we will look at three elements of the UK system and outline how they encourage environmentally friendly behaviour and in the second part we will compare these elements to measures in place in Sweden.
2. Key Elements of the UK Tax System
2.1 Climate Change Levy
2.1.1CCL is a tax on the supply of energy to businesses in the commercial, agricultural and industrial sectors. The tax, introduced in April 2001, works by charging for each unit of energy used therefore the more energy used the more tax a business has to pay. It’s an arbitrary way of trying to get businesses to reduce the energy they use and the emissions they produce. The charge per unit of energy varies depending on the commodity used and the pollution that the commodity produces. For example, electricity has a higher rate of charge (0.509 pence per kilowatt hour) compared to gas (0.177 pence per kilowatt hour) because it is more damaging to the environment (HMRC, 2013).
2.1.2 The government claims the CCL has had a significant impact on reducing the emissions produced by the UK. However, the House of Commons Environmental Audit Committee has an alternate view that the reductions are due to other measures already in place. They believe that the CCL rates are not significant enough to influence behaviour (CIOT, 2009). Another argument suggests that businesses are just passing on the tax by increasing their prices leaving the incidence of the tax with the consumers. If we look at the tax revenues from CCL, we can see that it has never reached its annual target of £1 bn, suggesting the tax is ineffective (Annie Reece, 2012).
2.1.3 In support of the
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