Tax on biggest polluters could raise £12.6bn a year

Tax on biggest polluters could raise £12.6bn a year

Sep 23, 2023

Higher taxes on the UK’s biggest polluters such as fossil fuel companies, frequent fliers and super yacht owners could have raised up to £12.6bn last year, claims Oxfam

Revenue raising measures could include a redesigned excess profits tax on fossil fuel companies; redirecting fossil fuel subsidies; a frequent flyer levy and new taxes on the use of private jets and superyachts. It also proposes ringfencing 20% of a new wealth tax proceeds for net zero support. which could raise between £4.4bn and £10.5bn a year.

Oxfam said a UK Frequent Flyer Levy could raise an additional £4.09bn in a single year, citing estimates from New Economics Foundation that just 15% of people in the UK take 70% of all flights. Aviation emissions account for around 7% of the UK’s greenhouse gas emissions and in 2018, were 88% above 1990 levels.

The current air passenger duty could be changed to a progressive tax so occasional fliers could pay less tax as a result.

New taxes on private jets and superyachts could raise £780.9m. In 2022, an estimated 90,000-100,000 private planes took off in the UK, causing around 501,077 tonnes of CO2 emissions. At the moment, private jet passengers only pay £78 tax per ticket, which should be increased to £780, Oxfam said.

A tax on superyacht ownership could be set at a rate of at least 20% of the value of the yacht per year. The average price of a superyacht is £4m. However, Oxfam acknowledged that a tax on yacht ownership at the UK level would be hard to enforce as these are highly mobile assets.

The Oxfam report, Payment Overdue, Fair ways to make polluters across the UK pay for climate justice, showed that by targeting those who are most responsible for emissions, the government could quickly and fairly secure much-needed funds to help tackle the climate crisis while ensuring the burden does not fall on ordinary UK households.

Lyndsay Walsh, Oxfam’s climate change policy advisor said: ‘While the world struggles to meet the rising costs of climate change and the UK increasingly looks to a dwindling aid budget to finance escalating global needs, billionaires are amassing yet more wealth and fossil fuel producers are reaping billions in profits.

‘At this week’s UN Climate Ambition Summit in New York world leaders urgently need to step up with tangible and credible solutions to tackle the climate crisis. The options outlined in this report offer the type of bold solutions that are needed to raise finance fairly and reduce emissions, by targeting the richest polluters.

‘Fossil fuel companies and the richest people who have done most to cause – and continue to cause – irreversible damage to our planet could and should be the ones footing the bill. It is crucial that any measures to raise new finance shield lower income households from the costs.’

Oxfam called for the government to stop using public finance to support fossil fuel producers operating in the North Sea, and instead redirect this finance, estimated to be around £3.35bn in 2022, towards a fossil fuel free future.

The paper also calls for the government to scrap the investment incentive linked to the current Energy Profits levy, which means producers can offset the tax they pay against investment in new oil and gas projects.

The report calculated that a permanent excess profits tax on fossil fuel companies last year could have raised an additional revenue of between £2.2bn and £4.4bn. It highlights that placing taxes on the largest polluters would not only generate additional finance, but it should also create incentives for them to reduce their emissions.

Walsh said: ‘More money is also urgently needed in the UK to reduce emissions in a fair way and move to a more sustainable economy which will simultaneously improve people’s lives and reduce poverty and inequality. But funding is falling far behind the levels required for this to happen.

‘Faster and fairer action to tackle the climate crisis, and to support those already hit hard in the UK and globally, can no longer be delayed. This payment is already long overdue.’

Both the Conservative and Labour parties have rejected proposals for a wealth tax and other countries which have introduced these have seen ultra high net worth individuals relocating to low tax jurisdictions.