Some say that the world will be flooded in a few years. Others are convinced that global warming is a fiction. Whatever you believe, one thing is certain; there is a tidal wave of green taxes heading towards British businesses.
From April 2011, companies will need to buy permits for each tonne of carbon dioxide emitted. The Carbon Reduction Commitment (CRC) scheme is intended to create a financial incentive to cut energy use, and those organisations that record the biggest reductions will get bonuses, funded by penalties imposed on those with the worst record.
But firms that fail to register their energy use by the end of this month could face fines of up to £45,000, despite the fact that the scheme and its deadline have not been widely publicised. At the end of last month, 60% of the organisations expected to register with the had not yet signed up.
Eligible organisations who do not register by the deadline will be fined £5,000, plus an additional £500 per day for each subsequent working day they fail to register up to a maximum of 80 working days.
Companies can register with the scheme as ‘participants’, ‘non-corporate information declarers’ and ‘corporate information declarers’.
Participants are organisations that consumed at least 6,000 megawatt hours of electricity through all of their meters during 2008, which is equivalent to an electricity bill of around £500,000, and are required to participate in the scheme by monitoring their energy consumption and purchasing allowances.
Once firms have signed up the CRC payments are expected to average £38,000 a year for medium-sized firms, and could reach £100,000 for larger organisations.
Business leaders have criticised the CRC, which was created by Labour but implemented by the Coalition, as “complex and bureaucratic” and questioned whether it would have any environmental benefits. The paperwork and costs involved in complying with the CRC scheme could put a significant new burden on companies already fighting the economic climate.
“As a CRC participant I have wondered if it wouldn’t be easier to simply scrap the whole scheme and replace it with a simple energy tax,” says RSA’s head of corporate responsibility, Dr Paul Pritchard. “However appealing the thought I don’t think a tax would achieve the potential carbon reduction benefits that an effective CRC scheme could deliver. I think it would be simply too blunt an instrument.”
He adds:” For many service companies where the cost of energy is (as a proportion of turnover) very small I don’t think there would be significant behaviour change and conversely for smaller companies where cost of energy is a significant factor its likely to lead to competitive disadvantage.”
And of course we will all have to pay for the increased taxes on businesses through reduced dividends, and higher costs for goods and services. That’s on top of the personal green taxes we pay on energy and travel.
The bad news is that the CRC is not the only worry.
A think tank, Policy Exchange, estimates that green taxes are going to have to treble by 2020, making energy bills massively more expensive. Last year they rose by 1.3%. Latest figures from the Office of National Statistics show that environmental tax receipts rose to £39.5 billion in 2009, an increase of £0.5 billion compared with the previous year and double the amount collected in 1993.
Duty on hydrocarbon oils such as petrol and diesel makes by far the largest contribution to environmental taxes and accounted for 65.6% of the total in 2009. Receipts increased by about £1.1 billion compared with the previous year. Revenues from other energy taxes – renewable energy obligations and the climate change levy – were broadly unchanged in 2009.
After duty on hydrocarbon oils, the next largest increase was in Vehicle Excise Duty (‘road tax’) where receipts increased by £0.1 billion to £5.6 billion in 2009. Revenues from Air Passenger Duty fell slightly to £1.8 billion.
Revenue from landfill tax was £0.8 billion. The amount raised from the aggregates levy, the tax on quarrying or dredging of sand, gravel or rock, was £0.3 billion.
In 2009, environmental taxes were 2.8% as a percentage of GDP and accounted for 8.1% of total taxes and social contributions.
Do green taxes help the environment?
You may think it’s all worth it and that we need to spend in order to save the planet. But unfortunately most so-called green taxes do not help the environment at all.
The evidence shows that increasing taxation on petrol and air travel doesn’t alter our behaviour – but it does raise more money for a cash-strapped Treasury.
The constant increase in petrol taxation is a perfect example. In Britain; we pay a higher proportion – 70% – of the cost of filling our tanks to the Treasury than any other nation in Europe. It stands to reason that this should be a disincentive to driving. But it’s not. Car journeys account for 88% of all distance travelled on land in Britain, making us the second most car-dependent nation in Europe after Norway.