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On the threshold of winter, the government of the United Kingdom is reviewing its energy taxation system. According to the reports, given by national companies this system is claimed inefficient and needs to be improved in the nearest future.
The United Kingdom is to reform its taxation system concerning energy sector. In this case, the UK government has launched the Energy Savings Opportunity Scheme (ESOS). It is a mandatory energy assessment scheme, which is to be used by organizations in the UK.
Those companies, which have qualified for ESOS, must provide data concerning electricity, consumed by their buildings, industrial processes and transport. This scheme aims to reveal the most efficient measures in terms of energy saving.
The UK companies are also to identify the area, where the consumption of electricity is the most significant, totaling at least 90 per cent of general consumption rate. These businesses are to offer a set of measure in order to make energy consumption more efficient.
The deadline for the first compliance is the 5th of December. There is a wide range of companies, which are expected to provide the Environment Agency with appropriate data. However, only 152 businesses has already accomplished it.
The UK companies are burdened with the complicated system of taxes and levies at present, which aim to reduce the emission of greenhouse gases. However, according to the latest report of the Engineering Employers’ Federation (EEF), the leading employers' organization in the country, this system requires revision.
The existing taxation system is inefficient, since the UK companies have to cope with a number of decarbonsation taxes. In this case, the government of the United Kingdom started to work at a new taxes and levies, which are to boost the growth of renewable energy sector.
The burdensome set of taxes and levies is decided to be replaced with only one tax as well as the only one report scheme will be launched instead of several ones. For instance, a range of report schemes, such as the Energy Savings Opportunity Scheme (ESOS), the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) or mandatory greenhouse gas (GHG) reporting, are available at present. Consequently, national companies are decided to use only one report scheme.
What is more, a new Energy Efficiency Investment Tax Discount along with a single low-carbon levy is offered in order to increase energy efficiency. According to the latest poll, concerning this issue, most of respondents, that is to say 83 per cent, are convinced, that this initiative is to contribute to making buildings greener and more energy efficient significantly.
These respondents also consider that a range of incentives for the renewables market growth is required. In this case, tax relief should be in terms of solar panels, double-glazing or boilers installation.
In the meantime, the existing incentive scheme, Climate Change Agreements (CCA), faces criticism. This scheme was developed by the UK Environment Agency in order to reduce the emission of carbon dioxide. It was to complete the Climate Change Levy (CCL), as it had several disadvantages.
However, this scheme is proved inefficient. The main argument is that it allows businesses to perform the imitation of energy efficiency improvements, since the discounts provided by this scheme are not able to address the issue of energy efficiency.
In summary, the UK taxation system is proved inefficient in terms of energy savings and requires revision as soon as possible. There are some suggestions made by the government in order to address this challenge. That is about replacing the existing baffling system with a simplified one as well as offering new green energy incentives.
