§ Norman BakerTo ask the Chancellor of the Exchequer what(a) advantages and (b) disadvantages he identified in deciding to introduce the climate change levy in preference to a carbon tax. [89098]
§ John HealeyThe Government's decision to introduce the climate change levy as a 'downstream' energy tax took account of the conclusions of Lord Marshall in his 1998 report 'Economic Instruments and the Business Use of Energy'. Lord Marshall concluded that a downstream tax on supplies of energy to the non-domestic sector would be necessary to avoid any tax impacting on domestic energy users. While under such a scheme it is difficult to determine the carbon content of electricity supplies other than as a broad average, it does encourage all non-domestic energy users to improve energy efficiency and thereby reduce carbon emissions. The climate change levy is also consistent with the Government's policy of maintaining a level playing field between different energy sources.