Climate: Move to cut VAT on `green products' blocked

The Treasury is poised to reject a green taxation measure which would help tackle the threat of climate change. Green groups are furious, says Nicholas Schoon, Environment Correspondent. Environmental groups have long been campaigning for a cut in Value Added Tax on products which help people to save energy, like insulation.

If such products were cheaper, and more were sold, that would cut the amounts of coal, oil and gas being burnt in Britain, and in turn lower UK emissions of climate-changing carbon dioxide.

It would also end the ``absurd anomaly'' whereby VAT on heat and light is now just 5 per cent, but VAT on goods which save fuel and power remains at the full 17.5 per cent. This tax distortion actually works to discourage energy efficiency.

In Opposition, Labour had supported cutting VAT on these "green products", such as low energy light bulbs, thermostatic radiator valves and cavity wall and loft insulation.

But in government it has failed to act. Gordon Brown's first Budget, last July, only cut VAT on energy, and environmentalists raged.

The Treasury did, however, announce a review into the scope for cutting the tax on energy saving products. It is being led by Customs and Excise, which administers VAT and was due to be completed by the end of this month.

The Independent understands HM Customs has come down firmly against cutting the VAT to 5 per cent which would have put energy saving equipment and products on a level playing field with fuel.

The move would have cost the Treasury about pounds 15m in lost revenues. In its report, Customs says that if the Government's intention is to help poor families and pensioners to save on fuel bills, then it would be much more effective to spend pounds 15m directly on helping them rather than on financing a tax cut which every household could benefit from. This was the Government's stated aim in launching the VAT review.

But green groups say this misses the point of cutting VAT on energy saving goods. It could only ever be effective as a green measure, not as one which fights fuel poverty.

Friends of the Earth's director Charles Secrett said: ``Making insulation cheaper would send a political signal from government that they want everyone to be environmentally responsible and do something about global warming.''

Andrew Warren, director of the Association for the Conservation of Energy, said: ``The full VAT on energy saving goods is an absurd anomaly which makes a nonsense of any attempt to use the tax system to help the environment.''

Customs and Excise declined to comment on its findings, saying the review was not yet complete.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
music

News
Russell Brand at an anti-austerity march in June
peopleActor and comedian says 'there's no point doing it if you're not'
Arts and Entertainment
Banksy's 'The Girl with the Pierced Eardrum' in Bristol
art'Girl with the Pierced Eardrum' followed hoax reports artist had been arrested and unveiled
News
i100
Voices
Oscar Pistorius is led out of court in Pretoria. Pistorius received a five-year prison sentence for culpable homicide by judge Thokozile Masipais for the killing of his girlfriend Reeva Steenkamp
voicesThokozile Masipa simply had no choice but to jail the athlete
Arts and Entertainment
Sister Cristina Scuccia sings 'Like a Virgin' in Venice
music

Like Madonna, Sister Cristina Scuccia's video is also set in Venice

Arts and Entertainment
James Blunt's debut album Back to Bedlam shot him to fame in 2004
music

Singer says the track was 'force-fed down people's throats'

Life and Style
The Tinder app has around 10 million users worldwide

techThe original free dating app will remain the same, developers say

News
news

Endangered species spotted in a creek in the Qinling mountains

News
peopleJust weeks after he created dress for Alamuddin-Clooney wedding
Life and Style
A street vendor in Mexico City sells Dorilocos, which are topped with carrot, jimaca, cucumber, peanuts, pork rinds, spices and hot sauce
food + drink

Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

IT Security Advisor – Permanent – Surrey - £60k-£70k

£60000 - £70000 Per Annum plus excellent benefits: Clearwater People Solutions...

MI Analyst – Permanent – West Sussex – £25k-£35k

£25000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

Geography Teacher

£100 - £160 per day + mileage and expenses: Randstad Education Leeds: This out...

KS2 supply teacher

£80 - £110 per day: Randstad Education Bristol: We are currently recruiting fo...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album