Green tax

An energy tax on businesses in the UK is on the anvil

Published: Tuesday 15 December 1998

A GOVERNMENT taskforce investigating ways of reducing business emissions of greenhouse gases has endorsed an energy tax on businesses in the UK. Lord Marshall, chairperson of British Airways, who headed the taskforce said: "My conclusion is that there probably is a role for a tax if businesses of all sizes and from all sectors are to contribute to improved energy efficiency and help meet UK's emission targets."

His report recommends a system of tradable emissions permits for large businesses, alongside an energy tax with revenues to be funnelled into energysaving schemes. Marshall said that the revenues from the tax would be invested in energy-saving schemes and technologies. He also urged the government to come up with rebates for energyintensive users to reduce the overall impact on these industries.

Lord Marshall said that the government should consider setting up a pilot emission -trading project to help UK companies and financial institutions develop the expertise needed to lead an international scheme in the future. Some environmentalists feel that the present proposal of energy tax covers only large companies. What is needed is to introduce a tax for small and medium-sized companies to improve their energy efficiency, they say. These companies collectively account for more than 60 per cent of total carbon dioxide emissions from business.

They say that the tax proposal should be a "downstream" tax on the final use of energy by industrial and commercial consumers. Tax rates should reflect the carbon content of fuels, in an attempt to maximise the emissions savings.

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