IEMA calls for long-term green tax strategy

The chancellor's Autumn statement must provide a clear long-term commitment on environmental taxes to secure business investment and drive energy efficiency savings, warns IEMA

Long-term certainty is vital for business investment decisions in environmental measures such as energy efficiency. By perpetuating uncertainty with green taxes, the government risks failing to achieve its environmental policy objectives for climate change and the delay will increase the costs of investment to business, according to IEMA.

The Institute is calling for the government to reconfirms its 2011 policy on environmental taxation in the chancellor's Autumn statement on 5 December and to set environmental tax levels up to 2020, to give business the opportunity to invest in energy efficiency and carbon reduction.

“Green taxes have the potential to drive environment and sustainability right to the heart of business decision making, by gaining the attention of the finance director and catalysing improved environmental performance,” said Martin Baxter, executive director of policy at IEMA. "However, if poorly conceived, they act as a cost on business, undermining competitiveness without achieving their full environmental potential."

In the 2011 Budget, the government pledged to "increase the proportion of tax revenue accounted for by environmental taxes".

The Treasury defines environmental taxes as those which:

• are explicitly linked to the government’s environmental objectives;
• have the primary objective of encouraging environmentally positive behaviour change; and
• are structured in relation to environmental objectives - for example, the more polluting the behaviour, the greater the tax levied.