The Treasury has published its Net Zero Review Final Report as part of the UK government’s net zero strategy. The report considers the impact of the net zero strategy on the UK economy and international competitiveness, the impact on households and the costs of transition, and the fiscal implications of the net zero transition.
In terms of the fiscal impact, the Treasury notes that the transition to net zero has material fiscal consequences, of which the primary one is the ‘large and relatively rapid structural shrinking of the tax base as motorists move away from using petrol and diesel vehicles’ ie the loss of fuel duty and vehicle excise duty, which the Treasury considers may not be offset by temporary revenues arising from carbon pricing including both the carbon price support and the UK emissions trading system (ETS). It also notes that in order to fund the significant public investment to support decarbonisation, tax rises may be necessary.
The Treasury notes that the impact on business and employment tax revenues is expected to be relatively small because companies in high-emission sectors represent a small proportion of PAYE and corporation tax receipts.
The Department for Business, Energy & Industrial Strategy (BEIS) published the UK government’s Net Zero Strategy: Build back Greener strategy document on 19 October 2021, which sets out policies and proposals for decarbonising all sectors of the UK economy in order to meet national net zero targets by 2050 and highlights a number of tax matters, including:
The Treasury has published its Net Zero Review Final Report as part of the UK government’s net zero strategy. The report considers the impact of the net zero strategy on the UK economy and international competitiveness, the impact on households and the costs of transition, and the fiscal implications of the net zero transition.
In terms of the fiscal impact, the Treasury notes that the transition to net zero has material fiscal consequences, of which the primary one is the ‘large and relatively rapid structural shrinking of the tax base as motorists move away from using petrol and diesel vehicles’ ie the loss of fuel duty and vehicle excise duty, which the Treasury considers may not be offset by temporary revenues arising from carbon pricing including both the carbon price support and the UK emissions trading system (ETS). It also notes that in order to fund the significant public investment to support decarbonisation, tax rises may be necessary.
The Treasury notes that the impact on business and employment tax revenues is expected to be relatively small because companies in high-emission sectors represent a small proportion of PAYE and corporation tax receipts.
The Department for Business, Energy & Industrial Strategy (BEIS) published the UK government’s Net Zero Strategy: Build back Greener strategy document on 19 October 2021, which sets out policies and proposals for decarbonising all sectors of the UK economy in order to meet national net zero targets by 2050 and highlights a number of tax matters, including: