Over the last 20 years or so we have seen a massive increase in so-called “green tariffs/green taxes” which are deemed important to tackle climate change and secure future energy sources. Time and time again governments have committed themselves to reducing emissions with the UK government legally obliged to reduce emissions by 80% by 2050 using the 1990 base figure. This is a phenomenal reduction in emissions and in the eyes of many experts will be impossible to meet. However, we know that climate change is occurring, green energy is viable so are green tariffs on your energy bills fair?
Example of green taxes
It is estimated that green tariffs add an average of £150 to annual UK household energy bills. This is a phenomenal increase on energy bills at a time when energy prices are already rising in the wholesale market. It would be wrong to suggest the UK is the only government sneaking in green taxes – it is estimated to cost the Australian taxpayer around AU$2 billion a year! These funds are used to set up household insulation schemes and fund the renewable energy sector.
Before we look further into green taxes and renewable energy sources, an average £150 increase in your annual energy bills seems rather steep. Ironically, when the politicians fight amongst themselves about tax rates nobody ever mentions reducing green taxes.
Funding renewable energy
The UK renewable energy sector is now a multibillion-pound industry although a large portion of funding is directly and indirectly supplied by the government, hence taxpayers. On the surface this does seem a little unfair because many of us currently paying additional green taxes will not feel the full benefit in our lifetime. It would be wrong to suggest that there have been no developments and no improvements in the renewable energy sector but it will be some time yet before it is self-financing and in the meantime taxpayers will foot a significant percentage of the cost.
On the flipside, directly and indirectly the government uses an array of tax incentives and tax breaks to assist other industries such as the oil and gas sector. Many of us automatically assume that the oil and gas sector, which is a very mature market, is self-financing but this is not necessary the case. We only need to look at the drop in the price of oil and the impact this has had on the Scottish economy and Aberdeen in particular. The government was effectively forced to put in place tax incentives and tax breaks which have reduced the historic multibillion pound tax income from the sector to zero. This will change when the price of oil picks up but it is not only the renewable sector which has been directly and indirectly funded by taxpayers.
Scam renewable schemes
There are rumours, counter rumours, truths and untruths floating around with regards to the renewable sector and various schemes supported by taxpayers. Unfortunately, a number of scam renewable schemes have been revealed and each one announced reduces the confidence taxpayers have in how their money is being spent. There are many scams across all business sectors but for some reason the money being poured into the renewable sector seems to be attract more than its fair share of fraudulent activity. Many taxpayers are concerned that politicians are blindly pouring taxpayer’s money into the industry so they can brag about their “green credentials” and how they are combating climate change. If only the politicians were more transparent with how green taxes were spent, the degree of fraudulent activity and how this was been tackled. We have a similar issue with overseas aid with politicians accused of not been able to control how the aid is eventually used and by who.
When will green taxes end?
In theory, and in practice to a certain extent, UK taxpayers are paying for the folly of UK politicians and governments around the world looking to improve their green credentials. If these industries were given a target by which time they needed to be self-financing then many taxpayers would accept this. If taxpayers were given an end date after which their “green taxes” would be removed from their energy bills this would make many people happy. At this moment in time green tariffs and green taxes continue to rise year-on-year and there is no sign of them ever ending. So, in the eyes of the taxpayer this is a never-ending obligation to fund the renewable sector whether it is profitable or not. Fair?
There are ways and means of financing new businesses and the renewables sector is no doubt a worthy cause. The fact that the UK population has been forced to fund this sector with green taxes and green tariffs, adding around £150 to the average annual home energy bill, is not fair. The politicians make out they are helping the UK population with tax breaks and other financial assistance but for some reason green taxes are immune from any reductions. When you consider the massive austerity measures introduced by successive governments since the 2008 crash, why should green taxes and renewable businesses be immune from any pain?
Unless there is more transparency, more trust and perhaps more importantly an end date, taxpayers will always view green tariffs/green taxes as extremely unfair.