Pivotal time for sector as Landfill Tax reaches 56/t

Landfill Tax today (April 1) rose to 56 per tonne in what is seen by waste industry experts as a pivotal point in terms of encouraging the uptake of alternatives to landfill disposal.

The 8 rise from the 2010/11 rate of 48 per tonne is part of the Landfill Tax escalator process. The escalator sees the tax for landfill disposal rise by 8 per tonnes each year up to 2014, with Chancellor George Osborne having put a floor under the 2014 rate of 80 per tonnes up to the year 2020.

The Landfill Tax and escalator is intended to drive councils and companies towards the development of recycling infrastructure by making the landfill disposal route a more expensive and unattractive option. This is, in turn, intended to help the UK meet its goals under the Landfill Directive.

The increase to 56 per tonne which is charged on top of landfill tax gate fees was today described as a pivotal time in terms of councils and companies assessing alternative disposal routes.

Simon Little, sales and marketing director at Powerday, told letsrecycle.com: The main point for us is this is very much a pivotal time in terms of taking cost of waste away from landfill and pushing it towards pre-treatment facilities and materials recycling facilities.

He added that this came at a difficult time for companies, who are already burdened by increases in fuel costs. This is even despite the proposed increase in fuel duty, which was supposed to come into effect today, being scrapped by Chancellor George Osborne.

Powerday has attempted to ease these increases by reviewing its pricing policy and not intends to not pass on the increase in Landfill Tax charges onto its customers.

Praise

The Environmental Services Association (ESA) praised the impact of the Landfill Tax. The trade body which represents private waste management companies and consultants said that the increase had helped create a platform for the development of alternatives to landfill.

Matthew Farrow, director of policy at the ESA, told letsrecycle.com: The Landfill Tax escalator has worked. The predictability of the annual increases and the medium term target rate of 80/tonne have given the waste management industry the platform needed to invest in a much wider range of treatment facilities that push waste up the hierarchy. Certainty regarding the future of Landfill Tax levels remains vital to companies investment intentions.

However, the Local Government Association (LGA) – which represents councils in England and Wales – warned that the rising cost of Landfill Tax will be borne by councils at a time of tightened local authority spending.

Clyde Loakes, vice chair of the LGA Environment Board, said: Councils and residents have done a tremendous job over the past ten years boosting recycling rates and slashing the amount of waste which gets sent to landfill.

“But the rising cost of landfill tax means that even if we maintain the present 10% reduction in the amount of waste we put in the ground, council tax payers will be handing over 566 million next year. By 2014 the cost will be 590 million.”

Increases and freezes

The lower rate of Landfill Tax, which applies to inert material, such as incinerator bottom ash, remains frozen at its existing level of 2.50 per tonnes for 2011/12, as well as 2012/13, under plans introduced by previous Chancellor Alistair Darling.

Elsewhere, contribution levels under the Landfill Communities Fund have risen. The Landfill Communities Fund involves a portion of the tax paid by waste management companies being earmarked for community projects near landfill sites.

The maximum credit a landfill site operator may claim against annual landfill tax liability, in respect of qualifying contributions made, rises from 5.5% to 6.2% in the 2011/12 financial year. This increase is taken to keep the fund in line with increases in inflation.

AD

With regards to anaerobic digestion (AD), the revised Feed-in Tariff level announced by the Department for Energy and Climate Change announced last week also comes into effect today (see letsrecycle.com story).

Under the revised levels, the proposed 12.1p per kWh level for AD installations up to 500kW is replaced by a higher rate of 13p per kWh for AD up to 250kW and 14p per kWh for AD installations with total installed capacity of between 250kW and 500kW.