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UK government response on environmental taxes

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Treasury minutes published on 28 June 2021 summarise the UK government’s responses to the Public Accounts Committee’s 55th report from session 2019–2021 on environmental tax measures.

In accordance with the committee’s recommendations, the government will:

  • aim for the treasury to become an exemplar finance department in supporting the government’s environmental goals including the UK’s net zero target;
  • by COP26 in November 2021, will set out a clear vision of how the treasury will work to help the UK achieve net zero;
  • consider the pros and cons of publishing a roadmap that signals a clear trajectory to taxpayers for how tax measures will be deployed to contribute to net zero, writing to the committee to set out its thinking before the next budget; and
  • ensure it has sufficient information to assess whether environmental taxes are achieving their objectives and whether they are having wider impacts, including unwanted behaviour change.

The government also set out the areas on which it did not wholeheartedly agree with the committee’s recommendations:

  • although the treasury agreed with the principle of identifying how it would manage declining revenues from consumption of fossil fuels, worth £37bn in 2019/20, it felt that the timetable for setting out such a plan by the next budget was premature;
  • although considering the environmental impact of relevant tax changes is important, it did not consider that it could, or should, do so for every tax change by the next budget;
  • the treasury did not agree that it should consider and describe the expected impact of taxes on other departments’ responsibilities for environmental objectives or agree, by autumn 2021, with other departments robust approaches for assessing and monitoring the effect of tax measures on the government’s environmental goals, because this would unduly constrain its ability to make tax policy decisions; the treasury will, however, continue to work with other departments on tax design and impact.
Issue: 1538
Categories: News