Statement – Chancellor Must Create Long–term Strategy on Green Taxation

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.

In the Chancellors Autumn Statement, it is critical that Government confirms its policy on environmental taxation. Environmental tax levels must be set for a period 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. However, if poorly conceived, they act as a cost on business, undermining competitiveness without achieving their full environmental potential,” said Martin Baxter, Executive Director, Policy IEMA
IEMA is calling for the policy commitment Government made on environment tax principles in 2011 to be reconfirmed:

"Government will increase the proportion of tax revenue accounted for by environmental taxes. Tax policy will be developed in the context of wider Government levers (such as voluntary agreements and regulation) and overlap of policy instruments will be avoided.” HM Treasury - Budget 2011.

The Treasury defines environmental taxes as those which meet all of the following three principles:

• the tax is explicitly linked to the Government’s environmental objectives;
• the primary objective of the tax is to encourage environmentally positive behaviour change;
• and the tax is structured in relation to environmental objectives - for example, the more polluting the behaviour, the greater the tax levied."