Tax professionals set out case for a climate change tax roadmap

21 Oct 2021

The Chartered Institute of Taxation (CIOT) is calling on the government to set out how it plans to use the tax system to help meet its net zero ambitions.

In a new paper - Climate Change Tax Policy Roadmap - the CIOT cites the Corporate Tax Roadmap developed under the 2010-2015 Coalition government as a good example of how government can set a direction in which business can plan.

It said it would like to see ministers adopt a similar approach when thinking about the role of taxation in its climate agenda.

The Institute sets out its principles for such a roadmap in the paper, saying that the government should aim to ensure that climate tax policy:

  • Positions the UK as a global leader in the climate tax agenda, engaging foreign governments and institutions to develop ‘progressive tax policies that support the achievement of net zero’. It should aim to achieve cross-party consensus so that long-term strategy is not left to the mercy of electoral cycles.
  • Ensures a joined up approach between climate tax policy and wider policy objectives, providing a clear link between tax as a source of revenue and its wider impact in influencing behavioural change.
  • Is upfront about the threats to the UK tax base as decarbonisation leads to changes in taxpayer behaviour and the potential loss of existing revenue streams.
  • Is subject to consultation and engagement, so that stakeholders understand the rationale behind climate tax policies and have a greater understanding of what they are being asked to pay for and why.

Jason Collins, chair of the CIOT’s Climate Change Working Group that developed the paper, said:

“Now, more than ever, we need to start thinking strategically about the role the tax system will play in helping the government reach its net zero ambitions.

“A climate change roadmap can send a signal to businesses and taxpayers that they can plan ahead with confidence and certainty because they will have a broad understanding of the government’s long-term approach to tax and climate change.

“This can help to ensure compliance and support as policies evolve over time and may also help achieve cross-party consensus, recognising that the climate crisis transcends political cycles.

“And it can help to secure Britain’s legacy as host of COP26 by giving the country a platform from which to engage with foreign governments and institutions to build progressive tax policies that support a worldwide approach to the challenge of meeting net zero.”