In a bid to stimulate investment in green technologies, there is growing advocacy for significant tax reductions for sectors including electric vehicles and heat pumps.
The Confederation of British Industry (CBI) is championing these measures, proposing a cut in corporation tax to enhance the United Kingdom’s standing as a leader in sustainable technology innovation.
The CBI has proposed lowering the corporation tax for firms in the green sector to just 10%, a notable reduction from the current 25%. This move is targeted to entrench the UK’s position as a frontrunner in attracting investments in sustainable technology, despite the economic challenges.
Moreover, the CBI recommends an ‘enhanced green super-deduction’ with a rate of at least 120% for businesses constructing facilities for electric vehicle and battery manufacturing. This provision aims to catalyse the expansion of essential infrastructure to meet evolving market demands.
Reducing VAT on public EV charging points from 20% to 5% is another recommendation, estimated to cost the Treasury around £33 million. Further, eliminating VAT on home improvements like double-glazing could enhance energy efficiency and lower household energy consumption.
According to Carsten Jung, an economist at IPPR, decades of underinvestment have kept the UK in a ‘low growth trap’. The recent election of the Labour Government on a platform of economic reform underscores the need for a shift towards sustainable investment.
While addressing the Financial Times, she highlighted the catalytic role of public sector investment in attracting private investment, a viewpoint that aligns with the broader goals of fiscal and policy reforms.
Through these proposed tax incentives, the CBI and supporting organisations aim to create a fertile environment for green technology advancement and adoption.
The proposed tax reforms and fiscal strategies represent a strategic path towards a sustainable economic future. By aligning financial policies with environmental objectives, the UK can ensure continued growth and investment in green technologies.
The advocacy for tax incentives and borrowing flexibility marks a significant step towards strengthening the UK’s green economy.
Such measures are pivotal in meeting environmental commitments while fostering economic stability and attracting investment.
