Increasingly, governments and other policy makers are favouring the use of market-based measures to achieve environmental goals, in addition to regulatory ‘command and control’ measures. Some market-based measures are introduced by government as taxes or levies to encourage companies to avoid extra costs if they reduce the relevant environmental impact. The landfill tax introduced in 1996 is an example of one such measure:
The Landfill Tax
The landfill tax was the first ‘true’ environmental economic instrument to apply in the UK. Introduced by the November 1995 budget, it has applied to the majority of waste going to landfill since 1 October 1996. Landfill operators have a regulatory requirement to collect the tax and pay it to HM Revenue and Customs. This includes companies with in-company landfill operations. However, the tax is a market-based measure, designed to improve environmental performance. Companies do not have a mandatory obligation to reduce their waste arising as a result of the tax, although it is the intention of government policy that the tax sends a price signal so that companies introduce waste minimisation practices, thereby reducing waste going to landfill and, saving on the cost of waste disposal.
The landfill tax applies at two rates: the standard rate of £32 per tonne (from April 2008) the reduced rate of £2.50 per tonne for inert waste.
It was announced in the 2007 Budget that the landfill tax for non-inert waste will increase by £8 per tonne per year from 1st April 2008. The tax will continue to rise by £8 per tonne per year until it reaches at least £48 per tonne in 2010/11. There are a limited number of exemptions from the tax.
The landfill tax has been introduced by legislation and it is important that manufacturers and other businesses, as waste producers, are aware of the legislation in outline.
Finance Act 1996
This is the primary legislation on the landfill tax. It provides for secondary legislation which sets out detailed operational aspects of the tax, define which wastes are subject to the lower rate, and set out the nature of the exemption concerning waste from historically contaminated land.
Landfill Tax Regulations 1996 (SI 1996/ 1527) as amended by SI 1996/2000, SI 1999/3270, SI 2002/1, SI 2003/2313, SI 2004/769, SI 2005/759, SI 2006/770 and SI 2007/0965
These regulations set out the details concerning the administration of the landfill tax - including registration of landfill sites with HM Customs and Excise, accounting procedures, invoice details, and the basic method to calculate tonnage. Importantly, they also provide for landfill operators to claim a credit against their landfill tax payments where they make voluntary contributions to approved environmental trusts.
Landfill Tax (Qualifying Material) Order 1996 (SI 1996/1528)
Materials specified in this Order attract the lower rate of landfill tax which increased to £2.50 from April 2008.The Schedule lists nine groups of materials including conditions that apply. In outline the groups are:
|
Group |
Generic description of material |
Conditions |
|
1 |
Rocks and soils |
Naturally occurring |
|
2 |
Ceramic or concrete materials |
Processed or prepared, not used |
|
3 |
Minerals |
|
|
4 |
Furnace slags |
|
|
5 |
Ash |
|
|
6 |
Low activity inorganic compounds |
|
|
7 |
Calcium sulphate |
Disposed of either at site not licensed to take putrescible waste or in containment cell which takes only calcium sulphate |
|
8 |
Calcium hydroxide and brine |
Deposited in brine cavity |
|
9 |
Water |
Containing other qualifying materials in suspension |
Landfill Tax (Contaminated Land) Order 1996 (SI 1996/1529)
The order sets out the provisions for exempting from the landfill tax waste derived from the clearing of historically contaminated land, and the procedures associated with this exemption. The exemption applies specified circumstances only - for example, a remediation notice to clear up the site from which the waste originates must not have been issued and an exemption certificate must have been obtained at least 30 days before disposal begins.
Landfill Tax (Site Restoration and Quarries) Order 1999 (SI 1999/2075)
This order provides two additional exemptions from landfill tax. The first exemption is for ‘qualifying material’ (material listed in the Landfill Tax (Qualifying Material) Order 1996 (SI 1996/1528)) which is used for the purposes of restoring a landfill site. The second exemption is for ‘qualifying material’ which is used for the purposes of filling existing or former quarries.
Aggregates Levy (Registration and Miscellaneous Provisions) Regulations 2001 (SI 2001/4027) amended by SI 2002/1929 Aggregates Levy (General) Regulations 2002 (SI 2002/761) amended by SI 2003/466
A new tax on extraction of aggregates was introduced from April 2002. It affects quarries and others who extract resources from the ground. The levy is £1.60 per tonne on sand, gravel and crushed rock extracted in the UK or its territorial waters. It increased to £1.95 per tonne from April 2008.
The aggregates tax is also be applied to imports but exports will be exempt. Recycled aggregates will also be exempt. The is administered by Revenue and Customs and aims to encourage the use of recycled aggregate.