Chancellor Philip Hammond plans to raise gas bills for firms in the Budget in fight against climate change
PHILIP Hammond is plotting to hit businesses with a fresh green tax raid in his Budget, The Sun can reveal.
Treasury insiders said they are looking at hiking the tax firms pay on gas energy in a bid to wean them off carbon and onto renewable forms of energy.
But it would add up to half a billion pounds a year extra onto their annual energy bills. And experts warned the extra costs would be passed on to consumers.
The Chancellor wants to raise the Climate Change Levy (CCL) that businesses pay on their gas usage to match the same rate as the tax rate on electricity.
But this would nearly double the 0.339p per kwh firms pay on gas because electricity is charged at the higher 0.847p per kwh rate.
The Chancellor is looking at “equalising the tax between gas and electricity,” a Treasury source said.
The Treasury is committed to making the rates the same by 2025 but rather than reducing the electricity rate, Mr Hammond wants to raise the gas levy to the maximum ceiling.
Treasury beancounters have plotted it as a way of simplifying green taxes as well as raising crucial funds to pay for the NHS.
It is estimated the move would raise around £500 million a year for the Treasury.
Furious business groups said it was the worst possible time to hike taxes - and said any rise must be offset by tax cuts elsewhere.
Mike Spicer from the British Chambers of Commerce said: “Businesses have an important role to play in protecting the environment but this is completely the wrong time to be hiking up costs for firms. Given the current atmosphere of uncertainty and change, we’ve called on the Chancellor in the Budget to rule out any new costs or taxes for the remainder of this parliament. Any increase in the levy would have to be offset by reductions in costs elsewhere.
“Another way to incentive energy saving measures for businesses would be to remove plant and machinery from business rates evaluations, encouraging investment in more energy efficient methods.
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The current system penalises firms for improving and modernising their premises and equipment. In making the change to a low carbon economy, the government must ensure that energy intensive businesses are supported in their own transition by encouraging investment in sustainable plant, machinery and systems.”
A Treasury spokesman said: “We are committed to meeting our environmental targets and incentivising reductions in the use of gas. To help achieve this, in 2016 we announced plans to rebalance the Climate Change Levy so gas and electricity rates are equal by 2025.”
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