2.5 Landfill Tax

Fiscal measures, operating at a UK and European level, play an increasingly important role in influencing the way in which waste is managed and cannot be influenced at an areas waste strategy level.

Landfill Tax was introduced in 1996 to minimise the amount of waste generated and to develop more sustainable waste-management techniques by making landfill a less economically attractive option.

The implementation of Landfill Tax has considerably reduced the quantities of inert waste being disposed of to landfill sites. Much of this inert waste (such as soils, concrete, stone) is now being recovered and reused. As landfill tax for active wastes (as defined by HM Customs and Excise) increases, this will encourage consideration of recovery and reuse as waste-management options and support the movement of waste up the waste hierarchy.

The current landfill tax escalator, introduced in 1999, commits the government to raise the standard rate of tax for active waste by £1 per tonne each year until 2004/5, by which time it will have reached a rate of £15 per tonne. There is a strong case for increasing the tax significantly in future years to provide incentives for diversion of waste from landfill towards recovery treatments. The UK government announced in the November 2002 prebudget statement their intention to consult on a revenue neutral proposal to increase the tax escalator to £3 per tonne from 2005/6 on the way to a medium to long-term rate of £35 per tonne.

As an integral part of landfill taxation a landfill tax credit scheme (LTCS) has been returning some of the revenue from landfill tax to the community to improve environmental quality and local participation in waste projects.

The government has announced a reform the LTCS from 1 April 2003. The level of funding for the replacement schemes will be capped at the value of the tax which would have been forgone in 2002/3 if all the available tax credits had been claimed by landfill operators. Approximately one-third of the funding will continue to be made available through a reformed tax credit scheme for spending on local community environmental projects, ensuring that the current level of support for these types of projects is maintained. The remainder will be allocated to public spending to encourage sustainable waste management.