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  • Gas Users Organisation

Carbon taxes must not hit the poorest


The government must ensure that any Carbon Tax that pushes up household gas prices does not punish poorer households and increase fuel poverty. A staggering 2.1 million families are already behind with their gas bills.

On 4th January, the Times revealed government plans to increase gas prices through a carbon tax. Unless the impact is mitigated for lower income households this would be a heavy blow for consumers already reeling from Ofgem’s recent decision to allow sharp increases in gas and electricity bills.

Andrew Newman, Technical Director of the Gas Users Organisation, comments:

“We all agree that climate change is a serious problem that needs to be addressed. Whilst a Carbon Tax may have a useful role in ensuring that polluters pay, it is essential that this does not result in increased energy costs simply being passed on to domestic users in such a way that increases fuel poverty.

“Any carbon tax must be cost neutral for ordinary families. Other taxes for the lower paid should be reduced to compensate for carbon taxes on energy consumption. This should be common ground for all those who are in favour of progressive taxation.

“The principle that should be followed, as carbon taxes and environmental levies are phazed in, is that income taxes and national insurance charges are reduced or phased out for the lower paid, and that benefits and income support measures are increase for those on benefits, so that none of the additional costs of these imposts fall on these groups. This is a key fundamental principle.

“ 2.1 million people are behind with their energy bills, a staggering 600000 increase since last year. This is why we urge caution from the government when they are loading more and more costs on consumers.

“The stark truth is that when left to the market, gas prices are much lower than electricity prices, and for that reason having a gas connection hugely benefits lower income households. Indeed, as recently as November 2018, the UK Government Committee for Fuel Poverty called for 91000 new gas connections in order to combat fuel poverty. It is essential that any Carbon tax does not drive up fuel bills in a way that undermines the government’s own poverty reduction measures.

“But unfortunately, the government’s model is that consumers are expected to pay for decarbonisation. Already, households are paying subsidies to fund current renewable energy sources which are paid for by a levy on household electricity bills. The OBR calculate by 2022 the green levy to pay for renewables will cost £10 per week per household on household energy bills regardless of income and ability to pay. This is grossly unfair. BEIS is now proposing an additional gas meter tax.

“It is also important to ensure that any financial sacrifices that are being asked of UK domestic consumers are proportionate, when other states, like China, Russia and India are not making equivalent changes. The UK is responsible for just over 1% global emissions, compared to 28% from China.”

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