Exchequer urged to better understand green taxes

The National Audit Office (NAO) has claimed that the treasury and HMRC have only a limited understanding of the environmental impact of taxes.

According to the body, the exchequer departments fall short on a number of measures relating to both environmental taxes and the environmental impact of taxes.

The departments do reportedly carry out practices such as consulting with stakeholders and ensuring taxpayers get ample warnings of the implementation of environmental taxes.

However, the NAO claimed that they “do not quantify all costs and rarely specify how they will measure environmental impact”.

Split into four categories that include climate change levy, carbon price support, landfill tax, and aggregates levy, environmental taxes raised £3.1bn in 2019.

In turn, the NAO has urged the government bodies to do more to ensure existing and future measures sit in line with government’s environmental goals.

Gareth Davies, head of the NAO, said: “Taxes are one of the tools available to government in pursuing its ambitious environmental goals. 

“While there is some evidence of the positive impact that taxes can have on the environment, too little is known about their effect.”

He added: “HMRC and HM Treasury should work closely with other departments to ensure that existing and future tax measures are compatible with the wider environmental strategies being developed across government. 

“HM Treasury’s review of how the transition to net zero will be funded is an important first step in this process.”