Recommendations & Conclusions
5 items
5
Recommendation
Fifty-Fifth Report - Environmental tax …
Accepted in Part
HMRC has not done enough to evaluate how tax measures with environmental objectives have changed behaviour. HMRC’s monitoring of environmental taxes focuses on tax revenue, but this is not sufficient on its own. For example, falling tax receipts may mean that a tax is effective because businesses are changing behaviour, …
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HMRC has not done enough to evaluate how tax measures with environmental objectives have changed behaviour. HMRC’s monitoring of environmental taxes focuses on tax revenue, but this is not sufficient on its own. For example, falling tax receipts may mean that a tax is effective because businesses are changing behaviour, but it does not tell HMRC what businesses are doing instead and whether that is more or less environmentally harmful. HMRC has not monitored adverse outcomes sufficiently to understand the impact of environmental taxes. It does not monitor the effect of Landfill Tax on the export of waste, and it currently holds no information on levels of fly-tipping, although it had undertaken some analysis which found no correlation with Landfill Tax rates. The range of responses to a tax can be complex. In the absence of good monitoring data, evaluation is needed to understand the range of environmental impacts. HMRC has evaluated only one of the four environmental Environmental tax measures 7 taxes since 2010, in part because its research budget has been limited. HMRC is now planning to allocate an additional £2 million for evaluating tax measures in 2021–22. Recommendation: HMRC should ensure that it has sufficient information to assess whether environmental taxes are achieving their objectives and whether they are having wider impacts, including unwanted behaviour change.
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Government response AI summary
The government agrees with the recommendation for HMRC to ensure sufficient information on environmental tax impacts and sets a target implementation date of Winter 2021. However, it highlights existing data usage, ongoing development for the Plastic Packaging Tax, and notes that further evaluation activity will …
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HM Treasury
10
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted in Part
The UK is hosting the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow in November 2021. COP26 provides the opportunity for the UK to work with all countries and join forces with civil society, companies and people to inspire climate action.19
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The UK is hosting the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow in November 2021. COP26 provides the opportunity for the UK to work with all countries and join forces with civil society, companies and people to inspire climate action.19
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Government response AI summary
The government agrees with the recommendation for HM Treasury to set out a net zero vision, stating that BEIS will publish the comprehensive Net Zero Strategy. HMT will not publish a separate strategy but its Net Zero Review will update on how climate considerations are …
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HM Treasury
19
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted in Part
When we asked HM Treasury whether the tax system would have a role to play in achieving net zero, it said the role of tax would evolve over time from Budget to Budget.35 However, HM Treasury also recognises that as net zero is a 30-year programme, it needs to think …
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When we asked HM Treasury whether the tax system would have a role to play in achieving net zero, it said the role of tax would evolve over time from Budget to Budget.35 However, HM Treasury also recognises that as net zero is a 30-year programme, it needs to think about interventions over a long timeframe and not simply year by year.36
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Government response AI summary
The government agrees with the implied recommendation for long-term tax planning for net zero, committing to write to the Committee on the pros and cons of a roadmap by Autumn 2021. However, it notes reasons why a standalone tax roadmap may not be appropriate and …
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HM Treasury
24
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted in Part
If Parliament is to be able to effectively scrutinise the environmental impact of tax changes it needs good quality information. For each tax policy change, the exchequer departments publish a Tax Information and Impact Note (TIIN) explaining the objective of the change, and its revenue and other impacts. The NAO …
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If Parliament is to be able to effectively scrutinise the environmental impact of tax changes it needs good quality information. For each tax policy change, the exchequer departments publish a Tax Information and Impact Note (TIIN) explaining the objective of the change, and its revenue and other impacts. The NAO found that for tax changes with an environmental objective, TIINs described but rarely quantified environmental impacts.48 We asked the exchequer departments why they did not require the expected environmental impacts of tax measures to be quantified in TIINs. HM Treasury told us that decisions on what analysis to publish were for ministers. However, HMRC told us its analysts quantify impacts whenever they can, and that work depended on analysts having 40 C&AG’s Report, para 1.6 41 Q 87 42 Q 45; The Dasgupta Review, The Economics of Biodiversity: Headline Messages, February 2021, page 2 43 Qq 50, 82: C&AG’s Report, para 2.5 44 Q 1 45 Office of Budget Responsibility, Economic and Fiscal Outlook, CP 387, March 2021, paras 1.34, 3.11 46 HM Treasury, Budget 2021: policy costings, March 2021, page 18 47 Qq 1, 4 48 C&AG’s Report, paras 1.15–1.16 14 Environmental tax measures models and methods to do this. It said that progress was being made in quantifying impacts, citing the quantification of expected carbon reductions from the new plastic packaging tax, but it also recognised that it had more to do.49 Monitoring and evaluating tax measures
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Government response AI summary
The government agrees with the recommendation that HMRC should have sufficient information. It states HMRC already uses various data sources and is building evaluation mechanisms into the Plastic Packaging Tax design, but notes that further activity will be considered within HMRC's broader evaluation approach.
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HM Treasury
27
Conclusion
Fifty-Fifth Report - Environmental tax …
Accepted in Part
We also asked about the impact of the Carbon Price Support on the amount of electricity the UK imports. The Carbon Price Support is levied on around 100 electricity generators located in Great Britain on the fossil fuels supplied to them. The departments confirmed that the tax increases the price …
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We also asked about the impact of the Carbon Price Support on the amount of electricity the UK imports. The Carbon Price Support is levied on around 100 electricity generators located in Great Britain on the fossil fuels supplied to them. The departments confirmed that the tax increases the price of domestically generated electricity from fossil fuels compared to imports. They also said they had not assessed the impact of the tax on imports.54
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Government response AI summary
The government agrees with the recommendation that HMRC should ensure it has sufficient information to assess environmental tax impacts. It states HMRC already uses various data sources and is building evaluation mechanisms into the Plastic Packaging Tax design, but notes that further activity will be …
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HM Treasury