Business advocates propose significant tax cuts for green technology sectors.
- The CBI suggests reducing the corporation tax to 10% for green manufacturers.
- A “green innovation credit” is encouraged to promote low-carbon research and development.
- Further tax reliefs are proposed to support electric vehicle manufacturing.
- The IPPR calls for revised borrowing rules to enhance public investment.
The call for a substantial reduction in corporation tax for companies producing electric cars, heat pumps, and biofuels comes amidst ongoing discussions about economic growth and environmental responsibility. There are proposals to decrease the tax rate from the prevailing 25% to 10%, a move that is seen as essential to making the UK a competitive hub for green technologies.
The CBI is actively recommending a “green innovation credit” which would allow companies investing in low-carbon technology research to benefit from a tax relief of 40%. This initiative is part of a broader strategy to stimulate investment in sustainable development and is expected to attract significant interest from the business community.
Proposed enhancements to tax deductions for businesses involved in constructing facilities for electric vehicles and battery production have been made, with an emphasis on offering a super-deduction rate of at least 120%. Such measures aim to boost the domestic production capacity and further integrate the UK into the global supply chain for green technologies.
In addition to tax cuts, the CBI has suggested reducing VAT on public electric vehicle charging from 20% to 5%. However, the implications of these measures could lead to a considerable financial commitment from the Treasury, costing an estimated £238 million annually for tax reductions alone. The proposed super-deduction could further add £389 million to this figure.
Amidst these recommendations, the IPPR has highlighted the need for modifying government borrowing rules, focusing on the UK’s net worth rather than its debt. It proposes increasing public investment limits, potentially unlocking £50 billion for infrastructure and energy developments. This approach intends to break the “low growth trap” attributed to chronic underinvestment.
These initiatives reflect an increasing demand for government action to secure the UK’s leadership in the transition to a low-carbon economy.
