Source · Select Committees · Public Accounts Committee
Recommendation 24
24
If Parliament is to be able to effectively scrutinise the environmental impact of tax changes...
Conclusion
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
Government Response
Not Addressed
HM Government
Not Addressed
5: PAC conclusion: HMRC has not done enough to evaluate how tax measures with environmental objectives have changed behaviour. 5: PAC 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. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: Winter 2021 5.2 The government agrees it is important that HM Revenue & Customs (HMRC) should ensure it has sufficient information to assess the impacts of environmental taxes, including whether they are achieving their objectives. 5.3 HMRC already uses data and information from various sources to assess whether environmental taxes are achieving their stated environmental objectives and to identify and address unwanted behaviour and risks. For example, this led to the introduction of the Unauthorised Waste Sites measure to tackle non-compliance with Landfill Tax and wider waste sector regulatory requirements. HMRC is also building into the design of Plastic Packaging Tax mechanisms to support effective evaluation of its performance against stated environmental objectives. 5.4 Further activity will need to be considered within HMRC’s overarching approach to evaluation and monitoring. Evaluation can be time consuming and expensive, so the evaluation plans will need to be proportionate, in order to appropriately direct taxpayers' money. And, as the NAO has recognised, it can be extremely difficult to disaggregate the impact of tax measures from other spending and regulatory measures, or other wider factors that drive the behaviour of individuals and businesses. 5.5 Decisions on publication of evaluation and monitoring information are a matter for Ministers.