U.K. Treasury Will Get $648 Million Bonus in Carbon Tax Reformby
Treasury says scrapping the tax has neutral impact on finances
Government move `fairly disingenuous' say manufacturers
The U.K. government will get a 460 million pound ($648 million) bonus by scrapping one unpopular carbon tax while it increases another levy in 2019, despite claiming the move is cost neutral.
Chancellor of the Exchequer George Osborne said he would abolish the Carbon Reduction Commitment, which requires large companies and organizations to report their carbon emissions. The Treasury will increase the Climate Change Levy in 2019 “to make good the lost revenue,” he said in his annual budget speech to Parliament in London on Wednesday.
“It’s not a commitment: it’s a tax,” Osborne said of the CRC, which has been widely criticized by businesses since 2010. The government six years ago decided to keep revenues raised by the fee instead of recycling money to the best-performing participants as it had originally planned.
The end of the CRC and increase in Climate Change Levy will raise 425 million pounds in in the year through March 2020 and 35 million pounds the following year, according to the budget documents published by the Treasury. This undercuts Osborne’s assertion the reform will be “fiscally-neutral.”
“They’ve done it in a fairly backhand manner,” Richard Warren, senior energy policy adviser for EEF, the manufacturers’s organization, said in an interview. It’s “fairly disingenuous to be honest.”
The bonus will come from an overlap in the two programs, said Warren. The Climate Change Levy will rise in 2019 when the government is still collecting money from about half of the participants in the final year of the CRC, he said.
The changes were announced as part of a review into business energy efficiency policies that began in September to reduce the amount of environmental red tape that companies face.
Investors including Aviva Investors, BT Group Plc and Sky Plc had been worried the review would see the end of the mandatory carbon reporting law that applies to Britain’s biggest companies. They welcomed the decision to leave it untouched.
“With the decision, the U.K. remains aligned with international sentiment, which is placing greater emphasis on sustainable business models following last year’s climate conference in Paris and the creation of the Financial Stability Board’s climate disclosure task force,” said Steve Waygood, chief responsible investment officer at Aviva, in an e-mailed statement.