Could personal tax statements show the way for energy bills?

Wednesday 21st March 2012

Today the chancellor George Osborne is expected to announce plans for an annual statement for taxpayers, giving over 20 million people a detailed breakdown of how their tax was calculated for the year and where their money has been spent.

These statements, which would come into being from 2014, are being positioned by the Treasury as part of a drive to make the tax system simpler and more transparent. A Treasury source said: "It is quite right that people know how much tax they pay and what it is spent on."

Putting aside the potential political motivations for such a move, this represents an interesting step from the Treasury. The Chancellor has identified the need for transparency, and it’s an issue that is currently very high on the agenda for the energy sector, with consumers calling for clear information, help with energy efficiency and insights into their energy usage.

Could energy suppliers learn from what the Treasury is proposing?

Certainly the specimen statements put out by the Treasury today make for interesting reading. The tax statements would include a breakdown of how a person’s tax was calculated, clear displays of total tax obligations related to overall pay, as well as a detailed run down of how the tax deducted contributed to a variety of elements of public spending for the year.

Of course for energy suppliers, providing this sort of detail in relation to energy use poses a different technological challenge compared to the tax system. But it’s easy to imagine how consumers may react positively to this level of detail being integrated into their energy bills, providing information on how they are using energy across the home and electricity-hungry appliance groups.

The Chancellor has recognised that people want to know what their taxes are spent on; energy providers must now grasp the nettle and start to educate their customers on how they are ‘spending’ electricity in the home.

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