UK taxes designed to reduce negative environmental and climate impacts raked in £52.5bn for the Treasury in 2023, marking a near-five per cent increase on the previous year, according to the Office for National Statistics (ONS).
Released yesterday, the latest official data from the agency groups environmental taxes into three main categories – energy, transport, and pollution and resources – and covers revenues raised from taxes and levies such as Fuel Duty, Air Passenger Duty, and the UK Emissions Trading Scheme (ETS).
The ONS said it used an internationally-agreed definition of environmental taxes, which covers levies that seek to directly reduce negative impacts. However, it does not currently include levies that may promote environmentally positive behaviours, such as clean air zone charges or the single-use plastic bag levy, although the ONS said this could be reviewed in future.
Overall, it said UK environmental tax revenues rose 4.9 per cent in 2023 compared to the previous year, which saw £50.1bn raised for the exchequer.
Revenues from energy taxes accounted for three quarters of the revenues raised from environmental taxes last year, followed by transport which accounted for 22.5 per cent, and levies on pollution and resources which brought in just 2.4 per cent of the total.
Fuel duty remained the largest contributor to environmental taxes, despite the levy having been frozen for more than a decade, with successive Chancellors having repeatedly postponed the fuel duty escalator that was first introduced in 1993.
Fuel Duty accounted for 63.2 per cent of UK environmental taxes in the energy group last year, while the ETS and Renewable Energy Obligations together accounted for 33.5 per cent, the ONS said.
Meanwhile, total pollution and resources taxes have fallen since 2022 due to a drop in revenue from the UK’s Landfill Tax and the Aggregates Levy, which more than offset increased revenues from the Plastics Packaging Tax, the statistics show.
On average, UK environmental taxes increased from £575 for the average UK household in 2020 to £623 in 2021.
However, UK environmental tax revenue as a proportion of both gross domestic product (GDP) and the total tax take have remained relatively stable in recent years, following a decline from levels seen between 2009 and 2019, according to the ONS.
Steve Gough, chief executive of the UK’s largest packaging recycling regulations compliance scheme Valpak, which is owned by Reconomy, said the latest ONS figures suggest UK environmental tax revenues have returned to pre-pandemic levels.
He argued environmental taxes and levies could play a greater role in helping to support the development of a circular, net zero economy in the UK.
“As demand and consumption will only keep rising, increasing circularity where waste is reduced and conserving finite resources will be key to meaningfully reducing the amount of CO2 produced by economic consumption and reach net zero targets in a cost effective way,” he said.
“Government policy is one lever to achieve this while we hope that embedding long-term positive behaviours from businesses in the UK will further support more efficient resource management. Businesses that are prepared to embed circularity at the heart of their model can drive positive environmental change, reduce costs such as taxation and lay the foundation for future, sustainable economic growth.”
You can now sign up to attend the fifth annual Net Zero Festival, which will be hosted by BusinessGreen on October 22-23 at the Business Design Centre in London.
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