• Tue. May 28th, 2024

CBI urges government to provide tax incentives for green technology

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May 15, 2024

The Confederation of British Industry (CBI) is pushing for tax incentives in the UK to promote the adoption of green technologies like heat pumps as part of efforts to combat climate change and stimulate economic growth. The organization points out that the green economy presents a significant opportunity to help the UK achieve its goal of decarbonizing by 2050, potentially resulting in a GDP increase of up to £57 billion annually by 2030.

Despite acknowledging the potential benefits, the CBI warns that the UK could fall behind on a global scale. Both the US and Europe have implemented substantial reform packages to encourage green investment through mechanisms such as tax credits, subsidies, grants, and loans. The CBI emphasizes the need for the UK to take similar action to remain competitive and attract investment.

In order to strategically target key green technologies, the CBI has put forward several recommendations. These include the introduction of a Green Innovation Credit offering a 40% rate for green technologies and processes, a lowered corporation tax rate of 10% for profits from green technologies, and a minimum capital allowance rate of 120% to support capital investment. These proposals aim to signal to businesses that the UK is committed to a green agenda and is prepared to invest accordingly.

CBI chief executive Rain Newton-Smith expressed concerns about the UK lagging behind in the global green growth race and losing market share to competitors. She emphasized the importance of utilizing the tax system to incentivize green investment, stating that public funding alone will not be adequate. By leveraging mechanisms such as capital allowances, investment tax credits, and reductions in the corporation tax rate, the UK can drive the development and adoption of green technologies, ultimately facilitating long-term economic growth while achieving net zero goals.

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