3 September 2007
The value of all tax breaks available to encourage environmentally friendly activity is just 2% (1.8%) of the amount the Government takes in annually in green taxes, according to research by our tax experts.
Our calculations are based on information provided by the Treasury under the Freedom of Information Act reveal that the Government takes ?29.3 billion in green taxes every year, but hands back just ?549 million to environmentally friendly taxpayers.
According to our experts, the Government has made much of the incentives available to taxpayers who want to boost their green credentials. However, the reality is that almost all the revenue the Government collects in green taxes goes on general Government expenditure.
For example, the green tax on air travel (Air Passenger Duty) is worth ?2.1 billion annually to the Treasury, whereas Vehicle Excise Duty, which has been reduced for drivers with low C02 emissions, costs the Treasury just ?254 million a year.
Roy Maugham, Tax Partner, at our London office, comments: “It’s surprising just how lopsided the Government’s approach to green taxes has been over the last 10 years. At the moment it’s all stick and very little carrot, but arguably a more balanced approach would be much more effective at hitting Britain’s C02 targets.”
”Gordon Brown has been in charge of the UK’s tax system for the last 10 years. His record in this area doesn’t look impressive.”
“There’s been a lot of talk about green tax breaks but very little action – and the last thing the environment needs is more hot air. The Government should put its money where its mouth is on this issue.”
He adds: “There is now a perception that green tax breaks are widely available, but they are still largely insignificant.”
According to our experts, there is still a large amount of scepticism among taxpayers that the green agenda is being hijacked simply to raise taxes.
Roy Maugham says: “Taxpayers want to know that taxes raised to cut carbon emissions are recycled into either green investment or used to finance green tax breaks and are not a general tax raising mechanism.”
“The concern is that revenue raised from green taxes is being used to fund other Government pet projects such as the Olympics.”
Our experts also point out that green taxes may have a disproportionate impact on low income households, and that more generous green tax breaks could help make green technologies more affordable.
Roy Maugham says: “If the Government is serious about the role it plays in protecting the environment, it is time it produced accounts showing exactly the green tax revenues it receives and how much it spends on green initiatives.”
| Green Taxes | ? |
|---|---|
| Fuel duties | ?25.1bn |
| Air passenger duty | ?2.1bn |
| Landfill tax | ?0.9bn |
| Climate change levy | ?0.7bn |
| Aggregates levy | ?0.3bn |
| Vehicle Excise Duty bands E, F & G | ?0.2bn |
| Total | ?29.3bn |
| Green tax breaks | ? |
|---|---|
| Vehicle Excise Duty bands A,B,C, & D | ?254m |
| Enhanced capital allowances for energy saving technology | ?130m |
| Reduced VAT rate for energy saving materials | ?50m |
| Landfill tax exemption: waste from contaminated land | ?45m |
| Climate change levy exemption: electricity generated from renewable sources |
?25m |
| Land remediation relief | ?30m |
| Zero rate of VAT on cycle helmets | ?10m |
| Negligible green tax reliefs (e.g. zero VAT rate for microgeneration equipment, 'cycle to work' scheme etc) |
?5m |
| Total | ?549m |
We produce a range of informative publications focusing on the latest accounting issues. Click to add yourself to our mailing list.
Up to £15 million will be clawed back from academy schools before the end of the current academic year due to government budgeting errors, according to our data.
A quarter of all taxpayers may be paying the wrong amount of tax due to incorrect PAYE codes according to our analysis.
The cost of listing on AIM has risen at its fastest rate in more than five years according to our findings.
A sudden surge in M&A activity on AIM is being driven by private equity backed deals to take companies private, our research reveals.
From 6 April 2012 HMRC will be able to ask employers to pay a financial security where it thinks there is serious risk that the business won’t pay over their PAYE tax deductions or National Insurance contributions (NICs) on time.
The value of loans to businesses in the UK has slumped by 13% since the collapse of Lehman Brothers, the second fastest fall among the G8, according to our findings.
Our international network, UHY, welcomes new member firm in Tunisia, CNBA.
Hot on the heels of an announcement from HMRC that the closure date for the Liechtenstein Disclosure Facility (LDF) has been extended to 5 April 2016 has come speculation that the local banks are pushing for much higher transfers of funds into Liechtenstein and a minimum period for which any account must be kept open.
Almost two thirds (65%) of all penalties and decisions issued by HM Revenue & Customs (HMRC) to taxpayers in relation to VAT matters are subsequently found to be incorrect and are overturned on internal review.
Andrew Andronikou and Peter Kubik were appointed as Joint Administrators to Convers Sport Initiative plc (CSI).
