The Environmental Benefits Of UK Govt Reducing VAT On All Insulation To 5% Can Be
As the report by the Industry Taskforce For Peak Oil and Energy Security has pronounced, within five years UK faces oil scarcity. But, the sluggish efforts of the Government reveal it is not ready for the prognosis. Our habit patterns need changing. The VAT reduction to 5 percent already available to professional installation; but, excluding nonprofessional installation should be changed. The environmental benefits of the UK government reducing VAT on all insullation work to five percent would benefit all excluded potential beneficiaries.
In this era of budget stress, frugal homeowners are more likely to opt for do it yourself home renovation. Tax reduction would also support investments in the existing housing stock and help to improve the sagging housing market. The Construction Products Association understands this market benefitting factor and has expressed its support for the extension of the reduced VAT rate to do it yourselfers.
The thermal insulation market has already shown its responsiveness to favourable regulation and a rise in energy prices. By extrapolation, an extension of the 5 percent rate would lead to a further boom. In fact, a trial has already demonstrated the practical potential of this theory. The consequent loss in CO2 emissions would be environmentally beneficial.
The Construction Products Association has stated that many householders are capable of installing insulation themselves and yet they are paying the full rate of VAT on a product the Government must want to encourage them to buy. It is known that buildings are the largest single energy-using sector, accounting for 40 percent of energy consumption in Europe. Insulation is a highly cost-effective end-useful measure in reducing the emissions of green house gas emissions.
As noted by those who have studied this subject, a reduced VAT rate on insulation products is not necessarily passed on by professional installers to their client. This cannot be ruled out as the reason the UK market has shown relatively low consumption. But, when the installer is the one who will live in the dwelling this will not be a discouraging factor.
The experiment of the Isle of Man of a rate reduction, which led to increased revenue from taxation shows the economic gains that are a potential ignored by the UK government. The improvement in the stock of existing housing and a reduced push on development of green field location reveal the ancillary beneficial results. The UK government should learn from the example set by the Isle of Man Government. A change uncurrent Government policy would demonstrate the Government would like consumers to participate in doing what they can to aid the environment. It can also point out the economic gains to be had by taking this path to prod them in this direction. Meanwhile, the Government should keep in mind the message of that report about peak oil and how this rate reduction would encourage people towards changing their consumption habits.
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