17 July 2002 – The UK Climate Change levy, introduced as part of the measures aimed at meeting the UK’s Kyoto commitments, is failing to achieve its objective and should be scrapped, says the Northern Island Federation of Small Businesses in a report published Tuesday.

The levy was introduced in 2000 and taxes energy used by industry and commerce but the Federation of Small Businesses (FSB) argues that its effect is to hit smaller firms hardest. The body is calling into question whether the tax is achieving its goal of more efficient energy use, since 45% of businesses do not even know whether they are paying it or not.

Despite the governments claims that the Climate Change Levy is “fiscally neutral”, the FSB say that it represents a significant increase in business costs.

John Holbrow, FSB environmental affairs chairman, said: “Firms with large workforces and low energy use, such as local authorities and big businesses, are the winners because they have more staff eligible for the discount.

“The Climate Change Levy discriminates against smaller firms and is particularly hitting manufacturers and hoteliers who are already struggling.”

The federation said the levy was “a stealth tax”.

“The Climate Change Levy is an excise duty presented as an environmental initiative. It is a costly failure and should be scrapped – the FSB is lobbying for its abolition,” said Holbrow.