ESA calls for tax relief to boost waste infrastructure

The ESA, which is the trade body for the waste sector, is specifically calling for Green Infrastructure Investment Allowances to be introduced which could be used to offset the costs of financing recycling and energy recovery facilitiesby reducing the amount of corporation tax they need to pay.

The organisation explained that the industrial building allowances (IBAs) which used to support waste infrastructure had been phased out over the last few years, leading to a tax disincentive to invest in new infrastructure.

The ESA propose that investment allowances should be introduced for sustainable waste management assets that do not otherwise qualify for other forms of tax relief, and would be structured to ensure that businesses effectively pay the corporation tax rate on their profits over the life of the project.

Letter

The call for support was outlined in a letter to the Chancellor George Osbourne from ESA chairman Jean-Dominique Mallet of Veolia. The Associations director of policy, Matthew Farrow, also met with Treasury ministers this week to stress the importance of supporting green investment.

The letter stated: ESA has estimated that new residual waste treatment facilities could inject over an additional 1.1 billion to GDP by 202. This could provide over 500 million in new tax revenues for the Exchequer. ESA believes that the introduction of Green Infrastructure Investment Allowances could provide key support in bringing forward this investment.

Mr Farrow added: During the past 15 years the waste sector has been a strong source of revenues for the Exchequer. The waste management industry has collected around 10 billion in landfill tax since 1997, with over 1 billion collected in the last year alone.

Waste infrastructure was particularly affected by the removal of Industrial Building Allowances. Research by KPMG and Oxford University shows that infrastructure investment in the UK has a higher post-tax cost than in many other comparable countries.

Green Infrastructure Investment Allowances could offset this hit to the industry and help support the development of the recycling and recovery facilities the UK needs.