Recommendations & Conclusions
8 items
9
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted
HM Treasury told us that the final report will provide an analytical framework to consider the economic and fiscal costs of moving to net zero.16 HMRC said the final report would dovetail within a broader cross-government strategy on how to achieve net zero which BEIS is due to publish later …
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HM Treasury told us that the final report will provide an analytical framework to consider the economic and fiscal costs of moving to net zero.16 HMRC said the final report would dovetail within a broader cross-government strategy on how to achieve net zero which BEIS is due to publish later in 2021.17 HM Treasury said that the particular contribution tax should make to net zero, alongside other tools, needs to be thought of in the context of this overall strategy. It also said that there was a need for a comprehensive strategy first and then government would work out the role that tax would play within that strategy.18
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Government response AI summary
The government explains that HM Treasury is actively supporting environmental goals by conducting a Net Zero Review and is closely involved with BEIS in developing an overall Net Zero Strategy, ensuring tax options are considered.
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HM Treasury
11
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted
We asked whether by the time we get to COP 26 everybody will have a good idea of exactly how the government is going to meet its net carbon target by 2050. HM Treasury told us this was really a matter for BEIS. It explained that net zero would require …
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We asked whether by the time we get to COP 26 everybody will have a good idea of exactly how the government is going to meet its net carbon target by 2050. HM Treasury told us this was really a matter for BEIS. It explained that net zero would require an “immensely complicated” programme of work over nearly 30 years, and which will depend on things that are unknowable today, for example future technological change. While HM Treasury was clear that current and future governments would need to change the strategy, for example, as new evidence comes along, it acknowledged that it was critical for businesses and households to have “the best idea that they can have of the future” to reduce the whole economy cost. HM Treasury told us that the cross-government strategy was intended to set “out a very clear direction, next steps, plans and strategies, sector by sector, then an overall framework to try to pull all of those together.”20 It also told us that the government accepted that further action, beyond the current range of tax, regulation and other instruments, would be needed to hit the 2050 net zero target.21 The impact of environmental policies on tax revenue
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Government response AI summary
The government agrees with the committee's implicit recommendation that HM Treasury should aim to become an exemplar finance department in supporting government’s environmental goals like net zero, with a target implementation date of Autumn 2021.
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HM Treasury
17
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted
We raised the potential impacts of changes to taxes, to address the reduction in revenue from fuel duty, on small and medium-sized businesses, on different regions and on the levelling-up agenda. HM Treasury said decisions on taxes, such as fuel duty, include consideration of distributional impacts and the impacts on …
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We raised the potential impacts of changes to taxes, to address the reduction in revenue from fuel duty, on small and medium-sized businesses, on different regions and on the levelling-up agenda. HM Treasury said decisions on taxes, such as fuel duty, include consideration of distributional impacts and the impacts on the competitiveness of the economy. It also said that, in their Budget speeches, Chancellors have covered the impact of changes to fuel duty on incomes and on small businesses.31 Environmental tax measures and the Budget
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Government response AI summary
The government acknowledges the fiscal implications of transitioning to net zero and the erosion of fuel duty revenue. It commits to ensuring motoring tax revenue keeps pace to fund public services and will undertake early and broad consultation with society on future plans.
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HM Treasury
25
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted
The NAO found that HMRC monitors tax receipts for the four environmental taxes it administers but it collects little other data to understand changes in behaviour.50 Monitoring Landfill Tax receipts enables HMRC to collect and report data on the volume of waste going to landfill sites, which declined by 65% …
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The NAO found that HMRC monitors tax receipts for the four environmental taxes it administers but it collects little other data to understand changes in behaviour.50 Monitoring Landfill Tax receipts enables HMRC to collect and report data on the volume of waste going to landfill sites, which declined by 65% between 1997 and 2014. But monitoring revenue alone does not enable HMRC to understand how the diverted waste is disposed of and whether that is more or less environmentally harmful than it going to landfill.51
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Government response AI summary
The government agreed with the committee's Recommendation #5, which called for HMRC to ensure it has sufficient information to assess the impact of environmental taxes on behaviour, and set a target implementation date of Winter 2021.
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HM Treasury
26
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted
We asked HMRC what it had done to quantify the impact of Landfill Tax on the exporting of waste and fly-tipping.52 HMRC said that it knew there is a risk that Landfill Tax will incentivise illegal dumping or exports, but said other departments had lead responsibility for these forms of …
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We asked HMRC what it had done to quantify the impact of Landfill Tax on the exporting of waste and fly-tipping.52 HMRC said that it knew there is a risk that Landfill Tax will incentivise illegal dumping or exports, but said other departments had lead responsibility for these forms of waste disposal, with local authorities also having responsibility for fly-tipping. HMRC said it did not hold information on fly-tipping. But it added that while there is evidence that fly-tipping is a growing problem, it had found no clear correlation between fly-tipping and rates of Landfill Tax. HMRC stated it was supporting the work of other departments on exports, including through the joint waste crime unit, but the witnesses did not know how much Landfill Tax was lost from waste being illegally exported.53
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Government response AI summary
The government states it agrees with the general importance of HMRC having sufficient information on environmental tax impacts, describing existing data usage and new evaluation mechanisms for taxes like the Plastic Packaging Tax, though not specifically detailing plans for quantifying Landfill Tax impacts on fly-tipping …
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HM Treasury
28
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted
Evaluations can help the exchequer departments to understand whether environmental taxes are achieving their objectives and how they are changing behaviour. However, since 2010 HMRC has evaluated only one of the four environmental taxes, in part because it has not secured the necessary resources.55 HMRC confirmed its 2014 evaluation of …
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Evaluations can help the exchequer departments to understand whether environmental taxes are achieving their objectives and how they are changing behaviour. However, since 2010 HMRC has evaluated only one of the four environmental taxes, in part because it has not secured the necessary resources.55 HMRC confirmed its 2014 evaluation of Landfill Tax was based on qualitative interviews rather than quantified evidence.56 The NAO found that HMRC had only limited information on the impact of tax reliefs with an environmental impact. These include tax reliefs with environmental objectives, such as those which support energy saving and clean technologies, and large reliefs which are likely to affect the cost of producing or consuming products made from fossil fuels.57 49 Qq 42–43 50 C&AG’s Report, paras 19, 1.21 51 Q 22: C&AG’s Report, paras 13, 1.23, Case study 1 52 Qq 23, 54 53 Qq 23–24, 54, 60, 83 54 Qq 67–68; C&AG’s Report, Figure 2 55 C&AG’s Report, paras 1.30–1.31, 1.33 56 Q 25; C&AG’s Report, para 1.31 57 C&AG’s Report, paras 16, 2.9–2.10, 2.12, Figures 12–13 Environmental tax measures 15
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Government response AI summary
The government agrees with the derived recommendation that HMRC should ensure it has sufficient information to assess environmental tax impacts, setting a target implementation date of Winter 2021. It highlights existing efforts and commits to further proportionate evaluation within HMRC's overarching approach.
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HM Treasury
29
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted
HMRC told us that it shared with this Committee and the NAO the ambition to evaluate more tax measures. HMRC said it had therefore secured an additional £2 million for evaluation in 2021–22. In 2020–21, HMRC’s central budget for commissioning external research, including evaluations, was £2 million. HMRC also told …
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HMRC told us that it shared with this Committee and the NAO the ambition to evaluate more tax measures. HMRC said it had therefore secured an additional £2 million for evaluation in 2021–22. In 2020–21, HMRC’s central budget for commissioning external research, including evaluations, was £2 million. HMRC also told us that it would be publishing a new evaluation framework later in 2021, to set out the overall principles and approach it will be applying.58 The impact of tax measures on other government departments
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Government response AI summary
The government acknowledges the importance of evaluation and states that HMRC already uses various data sources and is building evaluation mechanisms into new taxes like the Plastic Packaging Tax, while further activity will be considered proportionally.
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HM Treasury
35
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted
The apparent lack of leadership and coordination on environmental tax measures, mirrors findings in our recent reports examining how the government is organised to deliver environmental goals. In our February 2021 report, Achieving government’s long- term environmental goals, we found that Defra had not shown that it had the clout …
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The apparent lack of leadership and coordination on environmental tax measures, mirrors findings in our recent reports examining how the government is organised to deliver environmental goals. In our February 2021 report, Achieving government’s long- term environmental goals, we found that Defra had not shown that it had the clout to lead the rest of government.73 While in our March 2021 report, Achieving Net Zero, we found that government did not have a coordinated plan for net zero by 2050 despite setting the target almost two years ago.74 66 Q 54 67 Qq 24, 54 68 Qq 21–22; C&AG’s Report, para 13 69 C&AG’s Report, para 13; Department for Environment, Food & Rural Affairs, Environment Agency, HM Revenue & Customs, National Crime Agency, Natural Resources Wales, Press release, Clock is ticking for waste criminals as new taskforce launched, January 2020 70 C&AG’s Report, para 1.28, Figure 8 71 Ev 4, Mineral Products Association, para 15 72 Qq 69–70 73 House of Commons Committee of Public Accounts, Achieving government’s long-term environmental goals, Fortieth Report of Session 2019–21, HC 927, February 2021, page 3 74 House of Commons Committee of Public Accounts, Achieving Net Zero, Forty-Sixth Report of Session 2019–21, HC 935, March 2021, page 3 Environmental tax measures 17
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Government response AI summary
The government agrees with the implied recommendation to address coordination, setting an Autumn 2021 target. It highlights HM Treasury's active role, its ongoing Net Zero Review, and close involvement in the BEIS-led Net Zero Strategy, which will be published before COP26.
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HM Treasury