Skip to main content
< Back to all posts 29 June 2021

We’re off track on climate commitments. How can tax reform help?

Last week the Climate Change Committee warned that time is running out for realistic commitments to tackle the climate crisis. The Committee

highlighted that this defining year for the UK’s climate credentials as the UK government hosts the UN Climate Change Conference (COP 26) has been marred by uncertainty and delay. With every month of inaction, it is harder for the UK to get on track, the committee warned.

Adding to these concerns is that the crucial net zero review by the Treasury has also been delayed. The review will assess how the UK can manage the transition to a low carbon economy.

The Chancellor should look urgently at the role that tax reform can play in a green and fair transition. The tax system can incentivise environmental goods, reduce emissions intensive and other environmentally destructive activities, encourage people and businesses to make the most of emerging low carbon opportunities and raise funds to support government action.

Together with a range of partners from the Green Alliance to Greenpeace and Oxfam we have set out principles for how the UK government should reform the tax system to help steer our economy to a fair net zero carbon future.

The principles stress the importance of aligning taxes to support climate and environmental goals, taxing fairly and ensuring effectiveness. It’s crucial that the tax system should be progressive overall, focusing on those with the greatest ability to pay and with the greatest responsibility for climate and other environmental damage. This will ensure that any changes are popular.

You can read the full set of principles here .

It is also important to stress that there are limitations, too. Tax reform will not be a complete solution and must be accompanied by other policies, such as regulation and increased public and private investment.

For ideas and suggestions what more needs to happen watch our webinar ‘Climate and Tax Justice: Time to act?’, which was chaired by Caroline Lucas MP and featured a range of speakers including entrepreneur and millionaire Gemma McGough and many others. Watch the recording here .

Image: Markus Spiske