Government consults on carbon border adjustment mechanism

The government is exploring whether a carbon border adjustment mechanism (CBAM) would be a suitable policy measure to mitigate carbon leakage risk in the future. A CBAM would apply to imported products to ensure they are subject to a comparable carbon price to that incurred by UK-based production.

Jason Collins chair of the CIOT and ATT climate change working group said: ‘A carbon border tax can play an important part in a “tax system to deliver net zero” although we will need to ensure the tax does not become protectionism by the back door. The government is taking a sensible approach by proposing a scheme that mirrors the EU’s efforts to reduce carbon emissions.’

The tax bodies added that when developing a new tax its administration must be considered from the outset. Simplification of the systems and processes for importing...