Waste not want not - States Assembly

£2/t since inception, the standard rate was
increased to £10/t in 1999. Current policy for
the standard rate is based on the escalator
announced in 1999, under which there was to
be a series of five annual £1/t increases from
April 2000 to April 2004. The standard rate for
active wastes will therefore reach £15/t in April
2004.
6.45 When the landfill tax was introduced the
rates were based on estimates of the
environmental externalities (i.e. the
environmental costs that are not reflected in the
market price) associated with disposing of waste
at landfill. As mentioned above, current policy
for the standard rate is based on the escalator
announced in 1999. In effect, the landfill tax
has become more of a “behavioural” tax,
designed to reduce further our reliance on
landfill, and encourage a shift towards more
sustainable waste disposal practices.
6.46 The annual revenue raised by the tax is
£502 million (2001/02) 101 net of contributions
to the Landfill Tax Credit Scheme, of which
95% is ‘active’ waste revenue. This is offset by a
0.2% reduction in employer National Insurance
Contributions.
Moreover, landfill disposal costs represent a
relatively small proportion of business operating
expenses. 103
6.48 If a reduction in landfill is desirable (and
the earlier chapters of this report argue it is), a
further increase in the landfill tax would be one
way in which this could be achieved. 104,105,106
It would be important, however, that any
increase in the landfill tax strikes the right
balance between stimulating the desired change
in behaviour whilst not imposing unacceptable
burdens on local authorities and business.
6.49 Of the total revenue sourced from active
waste, approximately 46% is paid by business
and the remaining 54% by local authorities.
Some analysis has shown that for business
sectors, a landfill tax as high as £45/tonne
would mean that waste management costs
would rise to at most only a few tenths of a
percent of turnover in any one sector. 107
However, this analysis would need to be
supplemented by more work to look at the
impact in more detail.
6.47 Since the introduction of the tax, there
has been a 60% reduction in the volumes of
‘inactive’ waste sent to landfill sites, whilst the
volume of ‘active’ waste sent to landfill has
remained broadly unchanged. 102 The latter is
explained by the fact that the costs of landfill,
including landfill tax, remain low compared to
other alternative methods of treatment/disposal.
101
Latest year. The Landfill Tax Credit Scheme is explained in more detail in Chapter 7. Source: Customs and Excise Annual Boards
Reports
102
Customs and Excise
103
Quoted in ACBE Resource Productivity, Waste Minimisation and the Landfill Tax (August 2001) – Original source: Effectiveness of the
Landfill Tax in the UK: Barriers to Effectiveness and Options for the Future, ECOTEC Research and Consulting (March 1998)
104
Environment, Transport and Regional Affairs Select Committee 5th Report op.cit
105
ACBE, op.cit
106
Budget 2002: “The Government anticipates that the standard rate of landfill tax will need to be increased significantly in the medium
term as part of the mix of future policy measures.”
107
ACBE, op.cit
ECONOMIC AND REGULATORY FRAMEWORK
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