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Tesco, Cambridge, Face 3.5 Billion Pound Tax on Carbon in U.K.
2010-10-20 16:49:17.348 GMT
By Alex Morales and Catherine Airlie
Oct. 20 (Bloomberg) -- Tesco Plc and Cambridge University
will be among 5,000 U.K. organizations forced to pay 3.5 billion
pounds ($5.5 billion) in fees for emitting carbon as part of
plans to balance the U.K. government budget.
The Treasury said today the money, generated from sales of
Carbon Reduction Commitment permits sold to organizations
ranging from supermarkets to hospitals and universities, will go
to the government instead of being redistributed back to the
participants of the program.
"The big shock to U.K. industry will be the change in
policy on the CRC Energy Efficiency Scheme," Roman Webber, head
of the U.K. energy practice at the accountancy firm Deloitte
LLP, said in a statement. This ''may turn a previously revenue
neutral scheme into a carbon tax."
The charges, which were also delayed by a year to start in
2012, will require the nation's biggest energy consumers to buy
permits covering the carbon they emit. Under the previous plan,
the money raised would go back to participants in the program,
with those that cut CO2 output most getting the biggest benefit.
The government said it would engage with businesses more on
its policy decisions and this ''completely flies in the face of
that,'' Gareth Stace, head of climate and environment policy at
London-based EEF the U.K. manufacturers organisation, said by
telephone today.
''In the last couple of years, companies have put in place
strategies to go beyond CRC and work with the rules to stay
ahead in the league tables and get back the recycled revenues,''
Stace said.
Treasury Documents
The Treasury disclosed the change in documents accompanying
Chancellor of the Exchequer George Osborne's spending review,
which shaved 81 billion pounds from government expenditure to
close a record budget deficit. They will be levied against
companies, state-run hospitals as well as the universities of
Oxford and Cambridge.
The documents said the government aimed to simplify the
program ''to reduce the burden on business.'' At the same time,
it said the CRC will raise 3.5 billion pounds over the four
years through the fiscal year ending in 2015.
''This is a fundamental change to the scheme, with major
consequences for the bottom line of those companies that are in
the CRC,'' Craig Lowrey, an energy consultant at J.C. Rathbone
Associates Ltd., said in an e-mail interview. This ''is now
another tax on industry in all but name.''
Emissions Covered
The plan covers about 10 percent of U.K. emissions, taking
in companies and organizations not included in the European
Union Emissions Trading System. The government's climate
adviser, the Climate Change Committee, last month recommended
the program be simplified, with participants split into public
and private sector to prevent a redistribution of revenues from
schools and hospitals to corporations.
The allowances will cost 12 pounds per ton of carbon
dioxide to start, and the Treasury said it assumed the cost will
rise to 16 pounds a ton starting in the tax year ending in 2014.
''The CRC will operate effectively as a tax on companies
taking part,'' said Harry Manisty, environmental tax specialist
in London at the accountancy firm PricewaterhouseCoopers.
For Related News and Information:
Top environment stories: GREEN <GO>
Stories about climate change: NI CLIMATE <GO>
Top energy stories: TOP NRG <GO>
--Editors: Reed Landberg, Alex Devine
To contact the reporters on this story:
Alex Morales in London at +44-20-7330-7718 or
amorales2@bloomberg.net;
Catherine Airlie at +44-20-7073-3308 or
cairlie@bloomberg.net.
To contact the editors responsible for this story:
Reed Landberg at +44-20-7330-7862 or
landberg@bloomberg.net;
Stephen Voss on +44-20-7073-3520 or
sev@bloomberg.net.
