Treasury consultation could see an end to the Landfill Tax Credits System

The announcement was made alongside the traditional Budget statement this afternoon and the Treasury said it will now consult with interested parties over the proposed change to any new system including how how a transition could be carried out without jeopardising existing projects. No mention of the timetable for ending of the system was given by the Treasury but if it was abolished, this could happen in about three years

Richard Sills, chief executive of Entrust, the regulator of environmental bodies, said: “We note the government’s orientation and welcome the consultation taking place in which we will put forward our view.”

Speculation

There has been heavy speculation in recent months that the Landfill Tax credits system would change for a variety of reasons. The DETR wants more money to go into recycling projects than has been the case. There has been concern in some quarters at the potential for fraud but others consider that this has completely overshadowed a true recognition of the successes of the credits system. A big argument in favour of keeping the credits system is that private sector money is levered into projects through matching funds. The waste industry is also thought to consider that the scheme is beneficial because of the private sector involvement which dovetails in with the massive part the private sector will have to play in moving 20-40 million tonnes of waste a year away from landfill in the future.

Concern at the lack of credits going to recycling and similar projects was also emphasised within the budget statement when the Treasury remarked that “the government is challenging the waste industry to meet demanding targets to raise the proportion of tax credits going to sustainable waste management projects”.

Landfill Tax rises to 12
The Budget statement also confirmed that from April the standard rate of landfill tax will be increased by 1 per tonne to 12 in line with the escalator announced in the 1999 Budget. But no details were given about any other plans to raise the Tax beyond the ongoing 1 per annum increase.

The Treasury said that this “demonstrates the government’s commitment to the environment and the use of economic instruments. Where appropriate this escalator will encourage greater diversion of waste away from landfill and allow waste producers and managers to plan their future waste management options effectively.”