Source · Select Committees · Public Accounts Committee
Recommendation 28
28
Evaluations can help the exchequer departments to understand whether environmental taxes are achieving their objectives...
Conclusion
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
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.