International Review of Waste Management Policy - Department of ...

46.10 Effect of the Policy on Pricing of Resources / Services
A tax on aggregates should encourage use of recycled aggregate by shifting demand
in favour of secondary materials, and reducing demand for virgin materials.
Influencing the behaviour of supply and demand relies on the elasticity of demand in
the market. However, the following three points suggest that the supply and demand
may be intrinsically more inelastic due to:
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1. the lead time required on obtaining new sources of aggregate can be up to 4
years, in which time the price will rapidly rise until availability improves;
2. aggregate suppliers do not account for the rush on material when it does
become available by curbing sales in order to even out demand; and
3. the aggregate production sector will be greatly influenced by a recession due
to their close ties with the housing and construction industry. 804
The extent to which the tax has the ability to change the pricing structure between
virgin and secondary material depends upon the level at which they are set. In
principle, the efficient tax rate is that which internalises the externalities associated
with primary aggregates extraction. However, from the perspective of economic
efficiency, externalities associated with secondary aggregates preparation should also
be taxed.
Notwithstanding the theoretical principles, few countries have sought to set the level
of taxes on aggregates through reference to some measurement of the externalities
associated with aggregates extraction. The UK provides an exception, the level of the
tax being based upon a study that estimated the total external costs of aggregate
extraction as €380 million per year which is comparable to the current levels of
revenue from the tax of €428. 805
46.11 Enforcement
As a tax or levy, the enforcement is undertaken by central government departments
and lack of compliance can result in court action. The enforcement procedure for the
UK includes initial auditing to identify potential businesses which may not be
complying, and as such, their audit frequency greatly increases. Following this, failure
to comply can lead to financial penalties which include:
� if one fails to register at the correct time they may be liable to a £250 penalty
or 5% of the levy involved, whichever is greater;
http://www.crwplatform.co.uk/conwaste/assets/Publications/2006-7-Reports/International-
Approaches-to-Waste-Prevention-and-Minimisation.pdf
804 R. Bleischwitz and B. Bahn-Walkowiak (2006) Sustainable Development in the European
Aggregates Industry, Wuppertal Institute for Climate, Environment and Energy, Accessed 20 th January
2009, http://web.fu-berlin.de/ffu/akumwelt/bc2006/papers/Bleischwitz_Bahn-W_Aggregates.pdf
805 Converted using an exchange rate of €1.2 = £1.
29/09/09