LONDON, (Reuters) – Britain may have to increase taxes in order to offset the decline of revenue from the shift to fossil fuels. This will impact the income which is currently increased by fuel duty.

The ministry stated that the biggest impact of the transition on public finances would be caused by permanent behavioral changes, which feed into the tax system. As the economy moves away from fossil fuels, the primary concern is the potential loss of substantial tax revenue.

According to it, fuel duty and vehicle exise duty revenue totalled 37billion pounds (or $51.2 billion) for the 2019/20 financial years, which is 1.7% of GDP.

Boris Johnson, Prime Minister, announced on Tuesday that he plans to reduce climate change through finding carbon alternatives in every sector of the economy, including heating and transport.

In July, the government’s budget analysts predicted that Britain’s 2 trillion-pound pile of public debt would increase as more money is invested by the country to reduce its carbon emissions to zero by 2050.

They said that if the world took quick action to curb climate change, it could have a less devastating impact than the coronavirus pandemic.

Finance ministry stated that temporary incomes from carbon pricing expansion were not likely to cover the overall decline in tax revenue, but it might help during transition.

The government could need to make changes to current taxes or find new revenue streams to sustainably deliver net zero.

($1 = 0.7231 pounds)