8 March 2021
Public Accounts Committee: Environmental tax measures

Sir Geoffrey Clifton-Brown, Deputy Chair of the Public Accounts Committee, questions the Permanent Secretary of HM Treasury and the Director General, Customer Strategy and Tax Design at HM Revenue and Customs about the use of taxation to help deliver the Government’s environmental and climate change targets. 

Comment from Sir Geoffrey:

The PAC examined in detail the subject of environmental tax measures, particularly in line with the NAO statement which said, “Our report on Achieving net-zero found that the UK’s greenhouse gas emissions will exceed government’s shorter-term targets without further action to close the gap” (page 45, 2.18). 

The committee found that certain environmental taxes were not working particularly well, for example, the Climate Change Levy, which covers electricity in this country but not any electricity generated from outside the UK via various interconnections. I was particularly keen to explore how relatively small changes in taxation could bring about considerable behavioural change with environmental benefits, a good example being the plastic bag tax.  

Environmental levies, charges, and taxes raise around £50bn a year so the committee was particularly keen to ensure not only are they effective in raising revenue but much more importantly, effective in bringing about environmental changes of which they were designed.  In this respect, the committee was pleased that the Government had taken plenty of time to consider the new plastic tax to be introduced next year.

National Audit Office Report: Environmental Tax Measures