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Why do we have a landfill tax?

7 October 2015


The landfill tax was first introduced in the UK in 1996 as our first environmental tax.  The tax is paid by the landfill operator to the HMRC (HM Revenue and Customs) and the cost is then passed on, by the operator to those who are disposing of waste to the landfill, on top of the existing landfill fees.  Landfill tax applies to all waste disposed of to landfill, at a licensed site, on or after the 1st October 1996, unless otherwise exempt.  Exempt wastes include wastes from dredging activities, quarrying and mining, pet cemeteries and inactive waste used for filling quarries.  The tax is charged by weight and there are two rates that are determined by the type of waste being disposed of.  Currently, the lower rate of tax is £2.60 per tonne and applies to ‘inactive waste’, for example rocks or soil.  This waste cannot contain any biological matter and cannot be reactive.  For all other waste types, both hazardous and non-hazardous, the higher rate of £82.60 per tonne applies.

The rates per tonne change every year on the 1st April.  There has been a steady increase in the higher rate of landfill tax and this is determined in the Governments budget every year.  Between 2008 and 2014, the rate increased by £8 every year, seeing a significant decrease in the amount of waste disposed of to landfill.  It has now been determined that both the lower and standard rates of landfill tax will increase in line with the Retail Price Index every year and the standard rate will not fall below £80 per tonne from 2014-15 to 2019-20.  Since 1998, the Treasury has received £10 billion in tax receipts (source: 360environmental).

The landfill tax was first implemented, and continues to rise, to encourage people to avoid landfill as a means of disposing of their waste.  With the increased cost of landfilling waste, other treatment technologies with higher gate fees have become more financially attractive, encouraging businesses to use alternatives to landfill.

This helps to implement the waste hierarchy, which is a legal requirement under the Waste (England and Wales) Regulations 2011.  The waste hierarchy is an order of preference for action to reduce or manage waste.  It highlights the need for an integrated approach to sustainability and that the focus should not just be on the technical end-of-pipe solutions.  The preferential order of the hierarchy, according to the regulations and the European Waste Framework Directive is Prevent, Reuse (or prepare for reuse), Recycle, Other Recovery and Disposal.  Landfill falls under the disposal section and is the least preferred option for waste disposal and often, the most expensive.

The legal requirement to avoid landfill is there for a number of reasons.  Gases such as methane and carbon dioxide are created by the action of microorganisms within a landfill and they contribute to climate change.  Landfilling of waste also represents a loss of resources.  Much of what goes to landfill could be recovered and used in place of virgin materials.  This has an obvious environmental benefit and helps us towards a more circular economy, where waste is seen as a resource rather than something to throw away.  Finally, there are a number of nuisance issues to consider.  People don’t like to live near landfills.  They take up a lot of space, are unsightly and have issues with odour, water discharges and pests.

The landfill tax obviously has its advantages and gives a financial incentive to implementing the legally required waste hierarchy.  There are concerns though, about fraud in landfill tax.  Quantities of waste that comply with the lower rate are increasing, leading to concerns that the waste is not being correctly classified.  The HM Revenue and Customs (HMRC), the Environment Agency (EA) and the police have also recently been working together on a large-scale operation that has seen 14 people arrested across the North East and Yorkshire.  This investigation has been looking at landfill tax fraud, where it is thought that more than £78m revenue is involved.  Overall, it looks like landfill tax will continue to rise and we need to look at more financially viable and environmentally friendly ways of disposing of our wastes.

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