Calls for carbon tax on imports to protect British firms over cheaper goods from polluting countries

Ministers are facing calls for a ‘carbon border tax’ to protect British companies against cheaper imports from polluting countries.

Tory former international trade secretary Liam Fox yesterday said the policy would push states with lax environmental rules to emit less, while improving domestic support for decarbonisation.

He told the Centre for Policy Studies that a carbon tax on imports would ‘level the playing field’ for UK industry.

Britain has cut carbon dioxide production 25 per cent over ten years, he said, while India’s and China’s increased by 62 per cent and 31 per cent, respectively.

Under the policy, imported goods that have not been carbon-taxed at source would face tariffs. Dr Fox was introduced by the Prime Minister’s father, Stanley Johnson, who said the logic of such a tax was ‘irrefutable’.

Dr Fox said there is ‘no point’ in damaging the competitiveness of the UK’s economy with domestic environmental measures while other countries continue to increase their emissions.

Instead, he suggested the ‘most obvious tool’ to tackle the problem would be to introduce a carbon border tax.

Under the policy, carbon emissions attributed to imported goods that have not been carbon-taxed at source would face tariffs.

‘The aim is to put an additional price on imports from countries where it is cheaper to pollute and level the playing field for domestic industries that produce goods with lower levels of greenhouse gas emissions,’ he said.

Dr Fox said the policy would ‘lead to a rebalancing against importers from those nations with more lax environmental standards’.

He added: ‘It can also be argued that a Carbon Border Tax can improve domestic support for climate change policies by securing the buy-in of local industry for deeper decarbonisation policies.’