The Chartered Institute of Taxation has published a guide to
‘green’ taxes, explaining how they can benefit businesses trying to save money
as well as helping them overhaul their approach to the environmental agenda.
The Green Tax Report assesses the performance and effect on business,
taxation and the environment of existing green taxes, and how they can change
companies’ behaviour on issues such as encouraging low-emission fleet vehicles.
As government seeks to bring in more green taxes, business must engage in
debate with it to ensure they genuinely help encourage better environmental
policies, not just put companies under more financial pressure.
The report groups environmental taxes into three main types:
• Cost-covering charges, based on the ‘polluter pays’ principle;
• Incentive taxes, designed to change damaging behaviour; and
• Revenue-raising taxes, where the financial yield to the Treasury is deemed
higher than that of the cause of reducing pollution.
The CIoT report suggests that the case for innovation in the environmental
agenda and ways to push it through the tax route can be furthered by economic
meltdown as various green tax schemes should save businesses money longer
term. It also concedes that there is a lot of cynicism around the efficiency of
current offerings. For example, while it makes a business case for green taxes,
the CIoT calculates that a 100% reduction in emissions in the UK would result in
a decrease of just 3% globally.
“The question then becomes: ‘In what way will tax be deployed in achieving
these environmental goals?’ Will taxes be used creatively as agents to modify
and change behaviour, or imposed in a blunt manner to penalise ‘bad’
environmental practices, possibly using the revenue to reward the
environmentally good,” says CIoT president Nick Goulding. Although new
environmental taxes were not announced in the last Budget, they remain on the
agenda. Some believe Chancellor Alistair Darling will increase environmental
taxes in the next pre-Budget report, after the publication of an energy and
climate change strategy by the government later this year.
“In environmental areas where fundamental change over a long period of time
is required to meet environmental goals, environmental taxes are not just a
policy option,” says CIoT’s Goulding, “they are an absolute imperative.”
Read the CIoT paper at