The UK Landfill Tax rate which has been raised every year since 1999 is now £80/tonne for every cubic metre of waste placed in a landfill. Next year (2015) it will only rise in line with inflation (the Retail Price Index – RPI), Chancellor George Osborne announced in the budget in March of this year. But, it is already costing Council Tax payers more than they realize, as revealed by the 360Environmental website:
“On average, a 1100 litre wheely bin of waste weighs approximately 65kgs. This will mean that if it all goes to landfill, HMRC – who administer the tax – will collect ….. £5.20 per bin in 2014 when the tax reaches £80/tonne.”
On average, recycling rates have reached at most 40%, so optimistically at the very best recycling rates for residual waste (black bag waste) the average wheely bin-full for fortnightly collection system (assuming alternate recycling weeks) is costing each family £5.20 x 0.6 = £3.12 in Landfill Tax per fortnight or 25 x £3.12 = £78/yr, which they are paying through their Council Tax bill. For an average householder that is maybe 2% to 5% of their Council Tax bill, and a not inconsiderable amount in the context of the current pressure on local authorities to reduce their spending. If this amount of money was not being taken from local authorities by central government, it could be used for example to keep essential local services, and libraries open.
The Landfill Tax was introduced in 1996 by the Treasury as an environmental tax to help reduce the amount of waste going to landfill. At the time the increase was quite gentle.
In fact, the whole idea was quite contentious even at those low levels, as it was seen as raising the costs for industry when the Conservative party was due within a year, to seek re-election and the economy although improving was not seen as doing very well, local government spending was being restrained and the cost would fall on local authorities to be paid by local taxes.
The timing was such though, that the governments charge to employers for employee National Insurance (health care funding) was being reduced at the same time. The politicians said that net cost to industry was nil, for that first year. It went through, and like so many policy changes in the political area, somehow it became accepted that Landfill Tax would rise every year thereafter.
The continuing justification for Landfill Tax rises has been its ability to apply an economic incentive to promote waste diversion away from landfill to help the UK meet its commitments to increased recycling within the EU Landfill Directives and other waste management regulatory instruments.
During the period that the Landfill Tax has been rising it has been an incentive to persuade householders and industry in the UK to reduce waste, re-use it, or recycle. It has helped to reduce landfill waste tonnages by 35% since the start of 2008 (Ref: statistics provided by http://www.360environmental.co.uk ) – although arguably much of this would have occurred anyway as the government’s new waste processing infrastructure has been brought into use by local authorities everywhere.
The figures for UK waste tonnages show a steep drop in 2009, after the rate of landfill tax exceeded £30/tonne for the first time in 2008, which indicates that the Landfill Tax has had a significant effect on waste diversion from landfill. But the reduction has not been sustained in the years since. This suggests that the current tax rises can no longer be justified as a “waste diversion incentive”.
That is because the tax rate, combined with the gate fee for waste disposal to landfill has passed the “tipping point” (excuse the unintended pun!) beyond which landfill disposal is more expensive than alternative disposal methods including recycling, for most materials.
Since, 2009 the rises in landfill tax have become a perverse form of taxation on householders through the local authorities that have to hand this money over to central government. In effect, all the increases since 2009 (that’s a total increase of 5 years at £8/yr, or £40/tonne) are effectively just a stealth tax by central government on Council Tax payers (ratepayers).
The added taxation after 2009 can have little or no effect on the amount of waste sent to landfill, because those wastes left are those wastes that cannot readily be diverted and will mostly now comprise the residual waste, after waste-processing has been undertaken.
The current pegging of the Landfill Tax rate with inflation is, the Chancellor announced in March now to be set at a new level for the future, to provide greater economic certainty to businesses. A consultation process with industry should now be underway. The Waster’s view is that governments should not raise money through local government charges which make it appear to taxpayers that the money is being spent by their local authority.
For that reason and due to the fact that the tipping point was at £40/tonne Central government should reduce landfill tax back to £40/tonne, not keep it at its current real value by using RPI increases.
The rate of £40/tonne is the rate necessary to ensure that recycling shows economic benefits to industry, but anything above that is just stealth taxation by overspending central governments, unwilling to admit the true level of their spending.
This web site was the source of our data. For further information on this topic we suggest also reading:
Ways for Industry to Further Increase Resource efficiency and Reduce Their Waste Disposal Costs:
Bernard Amos, CEO of environmental consultancy and contract management firm Helistrat, discusses the recent rise in Landfill Tax and the impact and opportunity for UK businesses. Credits: Landfill Tax: impact and opportunity for UK businesses | Packaging …
Budget 2014 Industry Response: Landfill Tax To Increase With …
Documents released with Chancellor George Osborne’s Budget speech today (19 March) revealed Landfill Tax will rise in line with inflation from 2015-16, but there was no long-term plan mentioned. It also revealed that the … Credits: Budget 2014 Industry Response: Landfill Tax To Increase With …
Taxation simply to collect money for central government purely as a tax to fund general spending, through waste disposal, was not considered justifiable when it started, so why is it considered OK by our politicians now?
And, finally we would like to point out that the government is using part of the landfill tax to fund “fighting environmental crime”. Most of that will go toward catching fly tippers, which would be nowhere near so profitable, and therefore less of a problem, if the Landfill Tax was not so unjustifiably high.
We welcome your comments.
UK Landfill Tax
UK Landfill Tax
UK Landfill Tax