A recent Policy Exchange suggests that the next Budget announcement would be the ideal time to reveal an economy-wide carbon tax for the UK.
The suggestion was made of Former Labour Chancellor, Lord Alistair Darling and former Conservative leader, Lord Michael Howard at a recent think tank conducted by Policy Exchange regarding carbon taxes.
The former ministers claim that an emissions levy for both domestic and overseas producers would result in a drop in greenhouse gas emissions, increase competitiveness within the heavy industry sector and create a fund which could help towards tackling climate change.
Policy Exchange believe that non-UK companies which import high carbon products to the UK should be subject to the same carbon taxes as domestic companies.
The final report from the think tank also urges the government to remain a member of the EU’s emissions trading system (ETS) until the start of 2021, in addition to revamping carbon taxes.
It suggests that the new tariff should rise at a steady rate which would be set by an independent body, the tax would then be paid by all companies that sell fossil fuels in the UK.
In the proposal, consumers would be protected from price increases through dividends which would be paid back to the public annually.
Darling & Howard said: “As one of the richest countries on earth, and historically one of those with the highest cumulative emissions, the UK has a duty both to assist developing nations to adapt to the negative effects of climate change and to cut our own emissions faster than those without the means to do so.
“One key tool in our armoury has to be a carbon tax. With Brexit looming, a decision needs to be made around whether the UK remains in the EU’s carbon pricing scheme, known as the ETS. One option is an independent British carbon tax.”