Committee slams energy tax proposals as `cumbersome’

The government’s planned energy tax came in for attack by a Labour-dominated group of MPs hours before the latest amendments to the measure were announced in the Budget. A report from the Commons select committee on the environment, transport and regional affairs said the proposed measure was an `extremely complex and cumbersome market instrument’ that […]

The government’s planned energy tax came in for attack by a Labour-dominated group of MPs hours before the latest amendments to the measure were announced in the Budget.

A report from the Commons select committee on the environment, transport and regional affairs said the proposed measure was an `extremely complex and cumbersome market instrument’ that failed to `meet the tests of good taxation’.

The report also criticised the system of rebates for energy-intensive users, which will discriminate against sectors not covered by the EU directive on pollution control, such as water and industrial gases.

BOC, for instance, will not qualify for a rebate despite being one of the 10 largest consumers of energy in the UK. It said the government should adopt a `simple, rigorous and equitable’ approach to eligibility for rebates.

It also emerged that the government’s proposed system of discounts does not comply with EU rules on state aid, which could oblige recipients to repay the rebates at a later date.

The Engineering Employers’ Federation dismissed the changes to the tax announced in the Budget as `very disappointing’ – there were concessions to the horticultural sector and rural users of liquefied petrolem gas but nothing else for industry.

A spokeswoman said: `I don’t think that the manufacturing argument was any less strong.’

* Budget news, p6-7