Britain’s Green Taxes Fall to the Lowest Level on Record

o8[x6in)1dc)8{9h8vlg2mjs_media_dl_1.png ONS, HMRC

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(Bloomberg) — The UK government is collecting less money from green taxes than at any point since records began 28 years ago, according to the Office for National Statistics.

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Environmental levies raised £54.3 billion ($73 billion) last year, down 0.5% from £54.6 billion in 2023, as fuel duty was frozen once again and receipts from the Emissions Trading Regime and the Climate Change Levy declined.

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Green taxes totaled the equivalent of just 1.9% of national output in 2024, the lowest since records began in 1997 and equal to 2021 during the pandemic. As a proportion of total tax receipts, green levies were 5.4% in 2024 – also a historic low.

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The official annual figures come amid pressure for the Labour government to reduce the UK’s overall tax burden, which is at a post war high. It also faces calls from industry to reduce green levies, which they argue are contributing to the country’s punitively high energy prices.

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“Carbon emissions taxes and excessive energy costs are squeezing the life out of the sector,” Ineos, the chemicals manufacturer, said last month.

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Despite the backlash, the ONS figures showed that green taxes in the UK are lower than among the majority of the European Union. Only eight of the 27 members raise less as a share of GDP from environmental levies.

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The ONS said the taxes under scrutiny include those on energy such as Fuel Duty, transport such as Air Passenger Duty and pollution such as the Plastic Packaging Tax.

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The burden has been shifting toward industry over the last decade as the government sought to protect households, most notably by first freezing fuel duty since 2011 rather than raising it in line with inflation and then by cutting the rate by 5 pence a liter in 2022.

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On average, environmental taxes paid per household in 2022 were £642, according to the most up-to-date ONS breakdown, well below the peak of £763 in 2010. In 2019, just before the pandemic, the average cost to households from the levies was £759. In contrast, the energy sector saw a big jump in green levies to a record £8.9 billion in 2022, from £6.5 billion the year before.

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The government plans to introduce a Carbon Border Adjustment Mechanism in 2027 to tax imports from countries that do not have equivalent green levies, which it says will prevent carbon “leakage” and create a level playing field for British industry.

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