Recommendation 29

In addition to direct costs to the Exchequer of achieving net zero, HM Treasury also recognises the impact of behaviour change reducing tax revenues. Revenues from Fuel Duty and Vehicle Excise Duty amounted to £37 billion in 2019–20, and if the current tax system were to remain unchanged receipts from these taxes will decline towards zero over the next 20 years.104 We previously reported in 2021 that HM Treasury cannot explain how it will manage declining revenues from consumption of fossil fuels and that it should set out a timetable for how it will consult on options for replacing these. Despite committing to write to the Committee in November 2021 with such a roadmap, HM Treasury’s response did not provide one.105 HM Treasury told us that where possible, the government holds consultations on major tax reforms to support understanding of these measures. However, “…there is a great deal of uncertainty inherent in any modelling as far into the future as 2050, which is highly sensitive to economic, societal and technological developments. Given this, a tax roadmap could ultimately give a false sense of certainty.106 100 HM Treasury, Net Zero Review Final Report, October 2021. Executive summary; para 3.7 101 Q 70; Impact Assessment for the Sixth Carbon Budget; Department for Business, Energy & Industrial Strategy, Outcome Delivery Plan: 2021 to 2022, July 2021 102 Q 70 103 Q 71–72; Q 56–58 (Oral evidence: Covid-19: Cost tracker update, HC 173, 17 November 2021) 104 Q 106; HM Treasury, Net Zero Review Final Report, October 2021, para 6.4 105 Letter from Exchequer Secretary to the Treasury to PAC Chair dated 30 November 2021 106 Q 98, 106; Committee of Public Accounts, Environmental tax measures, Forty-Fifth Report of Session 2019–21, HC 937, 28 April 2021 Achieving Net Zero: Follow up 19