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Carbon Levy Will Be A ‘Stealth Poll Tax’ On Energy

Emily Gosden, The Sunday Telegraph

The government’s new carbon levy is effectively a “stealth poll tax” that will only work to put up household electricity bills and hand a windfall to old nuclear plants, the head of energy giant E.ON has warned.

The Treasury’s “carbon price floor” comes into effect on Monday and official estimates say it will add £5 to household bills this year, rising to about £50 by 2020.

The tax is intended to provide an incentive to invest in new wind farms and nuclear plants by making it more expensive to run coal and gas plants that emit carbon.

Tony Cocker, chief executive of E.ON UK, attacked the policy on the eve of its implementation, arguing that it simply “pushes up the price for electricity” and should be scrapped.

He told The Sunday Telegraph: “The carbon price floor is a tax and it’s pretty close to a stealth poll tax. It’s not based on ability to pay, it’s based on the requirement to keep warm and light your house.

“It was put in place with the stated objective of encouraging investment in low-carbon energy but it certainly doesn’t achieve that objective – it’s just a tax for the Exchequer.”

The measure is expected to raise billions of pounds for the Treasury over the next decade.

Mr Cocker criticised the lack of transparency over the tax. “It’s kind of hidden away,” he said. “If you called it an electricity tax or duty, like the fuel duty on cars, we could all understand that goes to the Exchequer.”

The carbon tax would also provide an unintended “windfall” subsidy for existing old nuclear and hydro plants, which is “completely unnecessary because it’s already been paid for”, he said.

European green policies already make polluting industries buy permits for each tonne of carbon they emit. However, the Government believes the prices have been too low and has introduced the carbon price floor to “top up” the cost per tonne of carbon dioxide.

But the tax has not proven enough to encourage new nuclear and wind power investors, with companies now being offered separate long-term subsidy schemes.

Because Britain is acting unilaterally in increasing carbon costs, critics say the tax will also have no effect on reducing carbon output.“If we charge more for carbon in the UK than is charged in Europe as a whole, all that means is we will burn less coal in the UK and the rest of Europe will burn more coal,” Mr Cocker said.

Manufacturers have called for the tax to be scrapped as they fear it will make British businesses uncompetitive compared with the rest of Europe. Ministers are planning a £150m compensation scheme to help compensate heavy industries.

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