FSB Condemns Climate Change Levy

by Jason Gorringe, Tax-News.com, London

18 July 2002

The Federation of Small Businesses (FSB) on Tuesday published a report condemning the Climate Change Levy as a 'stealth tax' on the UK's small businesses.

The levy came into effect in April 2001, and is imposed on taxable energy (such as electricity, coal, and gas) which is supplied to non-domestic users.

The report, entitled 'Climate Change Levy- another cost for businesses' reveals that 88% of small firms which pay the levy are worse off as a result, despite the fact that the government has claimed that the measure is 'fiscally neutral'- revenue raised is supposedly recycled through discounts via employers' National Insurance Contributions.

Speaking earlier this week, John Holbrow, Chairman of Environmental Affairs at the FSB explained that: 'Firms with large workforces and low energy use, such as local authorities and big businesses are the winners because they have more staff eligible for the discount.' He continued: 'The Climate Change Levy discriminates against smaller firms and is particularly hitting manufacturers and hoteliers who are already struggling.'

Mr Holbrow concluded by announcing that the Federation is lobbying for the abolition of the tax, arguing that: 'The Climate Change Levy is an excise duty presented as an environmental initiative. It is a costly failure and should be scrapped.'

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