UK Conservatives Would Repeal Levy

The British Parliament has passed a climate levy on energy use by businesses that will come into effect in April. The highly controversial tax, which amounts to only 1 billion per year, has come under heavy fire from business interests on the grounds that it would hurt their international competitiveness.

In an attempt to reduce industry opposition, the Labor government will offset the tax by reducing business employers National Insurance contributions by 0.3 percent and cut taxes for energy-saving investment. The whole scheme, however, would fall more heavily on companies with high energy-to-employment ratios. The Conservatives in their party manifesto have promised to abolish the climate change levy if returned to office at the next election. This would be in addition to 8 billion in tax cuts targeted for businesses, savers, and working families (Financial Times, January 5, 2001).

The climate levy is not the only new tax that the British government has in mind to deal with global warming. Jonathan Porritt, chairman of the governments Sustainable Development Commission, said at the launch of the governments first annual report on quality of life that there would have to be a tax on air travel to pay for damage to the environment and human health (Daily Telegraph, January 26, 2001).