Welsh Government must ‘tread carefully’ on landfill tax

The Welsh Government is currently drawing up plans for how it will administer its Landfill Disposals Tax (LDT), which will replace the UK-wide landfill tax, controlled from Westminster, in Wales from April 2018.

A consultation on proposals for changes to the system was carried out in the spring, launched by Welsh Government minister Jane Hutt (see letsrecycle.com story).

The LDT is one of a number of taxation powers that is to be devolved to the Welsh Government alongside a land transaction tax, which will allow Wales to develop its own structure for property transactions.

Lakshmi Narain, CIOT representative on the Welsh Government’s Tax Experts Group, has praised the move to devolve the taxation powers to Wales, but warned over the complexity of possible changes to the system adding that the Welsh Government must ‘tread with caution’.

She said: “We have also been pleased to comment on the devolution of LDT. This is a more complex area than it may at first seem and so we advise the Welsh Government to tread with caution. A departure from other UK tax models may be required in order to fulfil objectives specific to Welsh government policy. Indeed, this is an opportunity for Wales to lead the way in producing a more modern, efficient and behaviour-changing LDT system.

“Changes should translate into legislation that not only supports Wales’s zero-waste agenda but also recognises the needs of operators who will not want major system changes.”

‘Pragmatic’

In its response to the consultation on the amended landfill tax powers, which closed this month, the CIOT advised that the Welsh Government develop a system that would help to deliver the aim of Wales’ Zero Waste Plan.

It stated: “Adopting a system that aligns closely with that of the rest of the UK is a pragmatic approach that also recognises the risk of waste tourism where disposals may be diverted across borders to a more generous tax regime.

“Thus, while there may be pragmatic reasons for adopting legislation that is substantially similar to that of the legislation in the rest of the UK, we do not think that the legislation or the manner in which it is implemented needs to be identical especially where it may compromise the objectives of the tax such as Wales’ Zero Waste Plan.”