Energy Levy Under Renewed Attac


By Vanessa Houlder and Kevin Brown

London Edition
June 11, 1999

The government's energy levy plans came under increasing pressure yesterday as the royal commission on environmental pollution said the tax would not work and as engineering companies threatened to move production overseas.

In a letter to Gordon Brown, the chancellor, the commission said the government should replace its proposed tax on energy use by companies with a carbon tax related directly to carbon dioxide emissions.

This would provide an incentive for users to switch to electricity generated from renewable sources. The proposed levy makes no distinction between "green" energy and energy produced by burning coal, gas and oil.

The commission said the government's concern to maintain the quantities of coal used in electricity generation was "incompatible with the stated aim of this tax, which is to achieve an environmental benefit by countering global warming". It said the proposed levy "will not be effective in achieving its stated aim".

Martin Temple, director-general of the Engineering Employers' Federation, warned in a separate letter to Mr Brown that many of the EEF's 5,700 member companies "may be forced to move their manufacturing processes overseas" if the levy was introduced.

David Giachardi, the EEF's director of policy, said the levy might increase overall levels of greenhouse gas emissions if it forced companies to move from the UK - where business emissions had been falling - to less-regulated countries.

"This is more than a bit of a scare," he said. "If you end up with a very asymmetric position on energy taxation you will find that either UK-based companies will move their production facilities to other countries or they will simply close down."

Ministers have been besieged by industrialists complaining about the tax, which many regard as badly thought-out and unfair. Mr Brown plans to use the £1.75bn it will raise to cut employers' national insurance contributions, which will mainly benefit the labour-intensive service sector.

However, senior Confederation of British Industry officials say they have detected signs of movement: in recent days Tony Blair is thought to have accepted much of the case being made against the tax.

More Information on Energy Taxes

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.