Landfill tax clarity sought in Autumn Statement

The waste and recycling sector is calling for clarity on how much tax will be levied on landfilled waste after 2015/16 in the Chancellors Autumn Statement tomorrow (December 5).

Meanwhile, councils have appealed for the government not to implement any rises in the rate of tax beyond its current level.

The higher rate of landfill tax for active waste has been set at 72 per tonne since April this year and will rise to 80 in April 2014, but it is not yet known how much landfill tax will be from 2015/16.

Chancellor of the Exchequer George Osborne is set to deliver his economic statement in the House of Commons on Thursday morning, to provide an update on the governments spending and taxation plans.

This comes amid increasing calls for the Chancellor to outline future landfill tax rates after no update was given in his Budget announcement in March this year (see letsrecycle.com story).

As a result, uncertainty over landfill tax levels after 2015/16 has continued to cause concern in the waste sector with businesses requiring clarity to inform investment and future planning for treatment infrastructure and services.

Tax partner with Ernst & Young, Julian Bowden-Williams, told letsrecycle.com that he thought it was likely the Chancellor would provide some more certainty on landfill tax after 2015/16 in his Autumn Statement.

However, he added that it is unlikely that there will be further clarity over the application of the lower rate of landfill tax.

He said: All I would expect to see is clarity over future rates. Everything else that is going on in landfill tax right now I dont think we will see in the statement.

He added that he did not expect any update on the lower rate of landfill tax for inert waste, which is currently 2.50 per tonne. Her Majestys Revenue and Customs (HMRC) was set to publish guidance on which materials are eligible for this lower rate last month, but this has been postponed to an unconfirmed later date (see letsrecycle.com story).

Mr Bowden-Williams said: It is really hard to tell with green policy right now what will happen. You have got a big issue between the lower rate and the higher rate so maybe there will be some movement there. With the higher rate, the question is whether that is working and we are still waiting for the outcome on the lower rate.

LGA

Meanwhile, the Local Government Association (LGA), which represents 423 local authorities, has written to Mr Osbourne calling for a freeze on landfill tax at the 2014/15 rate of 80, arguing that money would be better spent investing in waste infrastructure amid challenging financial circumstances for councils.

Chair of the LGAs environment and housing board, councillor Mike Jones, wrote that an increase in council tax would have a real and additional cost burden on tax payers of around 200 million more in 2020 than if the tax was frozen.

And, he said there was no evidence that any increases in the tax would have a material impact on future diversion of landfill or to increase recycling rates.

Councillor Jones said: To support the commercial waste industry to increase its capacity and investment in infrastructure we propose that the commercial receipts from landfill tax are made available to provide underpinning capital for forward thinking waste infrastructure projects. This would boost growth and enable the UK to develop a world leading position on deriving value from waste.

Meanwhile, waste management sector trade body the Environmental Services Association (ESA) has highlighted three areas it believes are essential for clarification on, including certainty over future rates of landfill tax, support for infrastructure via tax breaks to stimulate private sector investment and support for the Environment Agency.

Closed Loop Recycling

Additionally, Dagenham-based plastic bottle recycler Closed Loop Recycling has called for greater clarity on landfill tax ahead of the Chancellors Statement this week, but is in favour of landfill tax increases.

‘At Closed Loop Recycling we are advocates of annual increases in landfill tax, at least in line with RPI, as well as long term visibility of these tax rates in order that recyclers can continue to invest with greater certainty.’

Paul Levett, chairman, Closed Loop Recycling

Paul Levett, chairman of the companys advisory board, said yesterday (December 3): At Closed Loop Recycling we are advocates of annual increases in landfill tax, at least in line with RPI, as well as long term visibility of these tax rates in order that recyclers can continue to invest with greater certainty.

Mr Levett also repeated his call for a review of the outdated and flawed PRN/PERN system, which he said disadvantages domestic players, as well as greater enforcement of trans-frontier shipping regulations.

He said these measures would help to drive up collection rates and incentivise the use of recycled content in packaging.

Mr Levett commented: A revised PRN system that rewards those packaging manufacturers, retailers or brand owners who proactively choose to use recycled plastic in their products is what is needed. Users of recycled content should be able to offset this material against their PRN obligations thus creating an economic driver to bring about the best possible environmental outcome. This could revolutionise the British recycling industry and create many thousands of jobs by stimulating the construction of further infrastructure right here in the UK.