CBI Urges Tax Cuts for Green Industries
The Confederation of British Industry (CBI) has called on Chancellor Rachel Reeves to implement significant tax cuts for manufacturers of electric cars, heat pumps, and biofuels. This move aims to accelerate the UK's progress towards achieving net zero emissions.
The CBI proposes a reduction in the corporation tax rate for these sectors from the current 25% to a mere 10%. This would make the UK a more attractive destination for investment in green technologies.
Green innovation credit: A 40% tax relief for companies investing in low-carbon technology research and development.
A 120% tax deduction for businesses building factories for electric vehicles and battery manufacturing.
Lowering the VAT from 20% to 5%.
Eliminating VAT on measures like double-glazing.
These proposals align with calls from the Institute for Public Policy Research (IPPR) for changes to borrowing rules. The IPPR suggests allowing the government to increase public investment by focusing on the UK's net worth rather than just its debt. This could provide an additional £50 billion for infrastructure, energy, and healthcare investments, boosting productivity and breaking the UK's "low growth trap."
Chancellor Reeves has indicated openness to revisiting borrowing rules to encourage investment in green technologies. She recognizes the importance of public sector investment in crowding in private investment for long-term economic growth.
These proposals highlight the growing demand for the UK government to provide the necessary fiscal and policy support to achieve its ambitious net zero targets and transition to a low-carbon economy.