Source · Select Committees · Public Accounts Committee
Recommendation 32
32
We found the picture for cross-government working on the operation of a tax was more...
Conclusion
We found the picture for cross-government working on the operation of a tax was more complex when we looked in detail at Landfill Tax and the Carbon Price Support. Landfill Tax has had both positive and adverse impacts, and HMRC described it, and by extension all environmental taxes, as “a relatively blunt financial incentive”.63 A 2018 independent review of serious and organised crime in the waste sector said that since its introduction in 1996 the tax had “been transformational in commoditising waste as a resource, but a consequence of its introduction has been to increase the attractiveness of the market to organised crime”.64 HMRC estimates that the misclassification of waste at authorised landfill sites and waste disposed at unauthorised sites reduced Landfill Tax revenue by around £275 million in 2018–19 (28% of the tax due). This figure does not include tax lost from the illegal exports of waste and from fly-tipping.65
Government Response
Not Addressed
HM Government
Not Addressed
6: PAC conclusion: We were concerned that HM Treasury and HMRC seemed to view the consequences of environmental taxes as the responsibility of other government departments. 6: PAC recommendation: The exchequer departments need to: - consider and describe the expected impact of taxes on other departments’ responsibilities for environmental objectives, for example within tax impact and information notes; and - by autumn 2021, agree with other departments robust approaches for assessing and monitoring the effect of tax measures on government’s environmental goals. 6.1 The government disagrees with the Committee’s recommendation. 6.2 The government recognises that it is important to consider the impacts of taxes on environmental objectives and for HMRC and HM Treasury work closely with other departments to assess and monitor the impact of taxes. However, the Committee's recommendation could constrain the ability of Treasury Ministers to make decisions on the content of publications relating to tax policy in future Budgets. HM Treasury and HMRC already engage other government departments where it is appropriate in considering, formulating and managing policy, including tax policy that relates to environmental objectives, and will continue to do so. Whilst doing so the Exchequer departments have to take in to account the proportionality and practicality of further detailing of assessment and monitoring. 6.3 A recent example of such engagement is the Plastic Packaging Tax, in that it has been developed in tandem with wider waste policy reforms led by the Department for Environment, Food and Rural Affairs (DEFRA) and was decided on after considering a wide range of ideas to tackle plastic waste. Work also included cross departmental engagement between HM Treasury, HMRC and DEFRA to consider design issues with the new tax and interaction with planned DEFRA reforms and coordinating of consultations in 2019 on the high level design of the tax and waste reforms. 6.4 When considering the extent of this collaboration, HM Treasury and HMRC also have bear in mind the political and market sensitivity of tax decisions which are typically made and announced in Budgets to ensure coherency across the tax system. 6.5 The government will carefully consider next steps for options on internal assessment and publication of environmental impacts, taking into consideration the relevancy of environmental impacts to the tax measure and proportionality of which taxes to focus on to ensure value for money for the taxpayer. This will be kept under review in future Budgets. 6.6 Decisions on the publication of information are a matter for Ministers.