§ Mr. PearsonTo ask the Secretary of State for Defence what estimate he has made of(a) the cost of the climate change levy to his Department and (b) the savings from the reduction in national insurance contributions that will occur when it is introduced. [88862]
§ Mr. SpellarThe net impact of the climate change levy and the associated reduction in main rate of employers' National Insurance Contributions on the Ministry of Defence will depend on the rates of climate change levy. The final rates of climate change levy will not be set until Finance Bill 2000.
In addition, the Government are still considering a number of detailed issues on the tax treatment of different energy products which could have a significant impact in some instances. It is, therefore, not possible to give definitive figures about the impact of the climate change levy on the Ministry of Defence.
§ Dr. KumarTo ask the Secretary of State for Trade and Industry (1) what assessment he has made of the economic impact of the climate change levy on those chemical industries which are based on the electrolysis process; and if he will make a statement; [88198]
(2) what estimate he has made of (a) the number of extra jobs which will be created as a result of the reduction in employers' National Insurance Contributions 585W and (b) the extent of job losses in manufacturing industry following the introduction of the climate change levy; and if he will make a statement. [88406]
§ Ms HewittI have been asked to reply
The climate change levy is estimated to save around 1.5 million tonnes of carbon a year by 2010, thereby making a very significant contribution to meeting the Government's legally-binding target for reducing greenhouse gas emissions set under the Kyoto Protocol, and its domestic coal of a 20 per cent. cut in carbon dioxide emissions by 2010.
The climate change levy will entail no increase in the overall burden of tax on business as the revenue will be fully recycled via a 0.5 percentage point cut in employer National Insurance Contributions. Business will also benefit from an additional £50 million for schemes aimed at promoting energy efficiency and support for renewable sources of energy, like solar and wind power.
Following Lord Marshall's recommendations, and the Government's Statement of Intent on Environmental Taxation, the Government recognises the need for special consideration to be given to energy intensive industries given their energy usage and exposure to international competition. Consequently, significantly lower rates of tax will be set for those energy intensive sectors that agree targets for improving their energy efficiency. A number of sectors including the aluminium, iron and steel, and chemicals sectors are currently involved in those negotiations. The net impact of the climate change levy and the associated reduction in National Insurance Contributions on individual sectors will depend on the rates at which the levy is set. The final rates of the levy will not be set until Finance Bill 2000.
The Government is keen to work with business on the detailed design and administration issues relating to the levy. HM Customs and Excise have just completed a further round of consultation on these issues and the Government is assessing these responses alongside other representations in deciding how to design the levy to maximise the environmental benefits while safeguarding competitiveness.
As the Government's climate change consultation document makes clear, all sectors of the economy will need to play their part in tackling the problem of climate change. It is not the Government's intention to introduce new taxes on domestic fuel and power, for social policy reasons. However, there are a number of measures in place to encourage energy efficiency in households, including the Home Energy Efficiency Scheme. These measures are set out in the climate change consultation document and will form part of the climate change strategy to be published later this year.
The UK is not alone in having to meet targets for reducing greenhouse gas emissions, or in using economic instruments to do so. Since 1990, seven EU countries have introduced explicit taxes on the carbon or energy content of fuels, including most recently, the Eco-Tax' introduced by the German Government. On current projections, most OECD countries will have to introduce new measures of one form or another to meet their Kyoto obligations.