Will UK’s “Net Zero Ambitions” Require Additional Taxation in the UK Economy?
"Net Zero" means that the remaining greenhouse gas emissions in the economy are fully offset by reductions through activities such as reforestation or bioenergy with carbon capture and storage.
Britain was the first major economy in the world to pass legislation to end its contribution to global warming by 2050. The UK target would require all greenhouse gas emissions to be reduced to zero d 'by 2050, compared to the previous target of at least 80% reduction from 1990 levels.
The UK has already cut emissions by 42% while boosting the economy by 72% and putting net growth at the heart of our modern industrial strategy. This could bring the number of green-collar jobs to 2 million and the value of the low-carbon economy's exports to £ 170 billion per year by 2030.
When the government released its strategy to meet the UK's commitment to achieving net-zero by 2050, a report by His Excellency's Treasury Department highlighted the significant impact of government spending and tax revenue on cost recovery.
In light of the government's plans, HM Exchequer has published its own review Net Zero, which examines the potential impact of the zero transition on households, businesses, and the economy at large. Chapter six focuses on the budgetary implications of government ambitions and highlights three main pressures on public finances:
Reduction in tax revenue through decarbonization (including a possible reduction in revenue from carbon prices). The cost of public investments in support of decarbonization. Long-term financial pressures are already in place, notably to cover the costs of health, adult care, and public pensions.
While the Treasury Department makes it clear that failure to act on climate change poses significant financial risks, the report also highlights the uncertainty of the technology and the costs of reducing carbon emissions and shows how the taxpayer money market failure can be resolved with some help for taxpayers' money.
Finally, the government has already put in place ambitious investment plans to help the UK reach net zero. If additional public investments are to be made to support decarbonization, they may need to be financed through additional taxes or by shifting priorities to “other areas of public spending.
It was suggested that additional revenue from pollutants could be generated by raising carbon prices and avoiding additional taxes, but cautions: “In considering how to replace lost tax revenue, the government needs to consider its ability to fund targets"