The treasury is due to get a whooping cash injection with £19 million extra VAT coming in from the long-awaited carrier bag levy. And the pressure’s on as the government faces increasingly strident demands from MPs to hand it all over to ‘green’ causes, lock, stock and barrel.
The Treasury is due to collect 20% per cent VAT (1p) on the 5p charge levied on every plastic carrier bag used in Britain. The tax comes into effect in October 2015 and it’s predicted to reduce consumers’ addiction to carrier bags by an impressive 70%. It will also raise £70 million or so every year for green charities. But that isn’t enough for the Environmental Audit Committee, dominated by Conservative MPs, who feel the £19 million VAT generated by the scheme should also be handed back to green causes and used to fund new environmental projects.
We use over eight billion plastic bags in England alone every year, roughly 130 each, but when Wales introduced the levy, the bags per person-per year figure has dropped right down to 22 since autumn 2011. With, I assume, a corresponding drop in the VAT generated by the levy, which makes it a relatively short-term VAT win for the government.
Who will win? The smart money is on the Environmental Audit Committee right now, and we may well see green causes benefiting even more than they expected from the levy.