Policy Brief for UK Landfill Tax

Eva Wu

Lulu Yu

4th April

 

Introduction

In the UK, landfill is the predominant form to dispose waste. Landfills account for 84% of Municipal Solid Waste. According to the report, UK’s domestic waste increases about 3% every year.  Since 2000, UK has approximately 434 tonnes of waste every year. Furthermore, the Environment Agency, who was responsible for regulating the operation of waste collection and disposal after 1996, found that the disposal with fewer voids caused various problems, such as gases generated by the waste. According to the data, disposal and  the landfill’s waste decomposition process lead to 45% of methane emissions in UK.

Landfill is a less desirable option for the waste disposal, which UK used for managing the most waste. We can see land fill is at the bottom on the list of UK waste hierarchy. The optimal choice to deal with the wastes is to reduce the generation of waste. Therefore, the government have an incentive to change the methods of management of waste from disposal to more sustainable way, including reduction, reuse and recycle.

The UK waste hierarchy

Reduction   Most attractive option centred on reduction or minimisation of waste at source include using less packging

Re-use          Including refilling of receptacles.

Recovery      Including the incineration of waste to use as energy, the composting of waste and materials recycling

Disposal         Least attractive option usually involves landfill

 

Coverage and Exemptions

Basically, all the waste disposed at licensed landfills sites, which are forced to register with the Customs and Excise, is liable to the tax.

In general, the volume of waste involved in the exemption is hardly likely to be significant and there were several types of waste are obtain exemption of the landfill tax.

1) Naturally occurring mineral waste from mines and quarries

2) Dredged spoils from inland waterways and harbours

3) Waste generated from cleaning  up historically contaminated land

4) Inert waste used for landfill site engineering

5)Water used to facilitate the transportation of waste

 

Goal and Implementation

The aims of the tax as set out in the UK Waste Strategy were: “to ensure that landfill costs reflect environmental impact thereby encouraging business and consumers, in a cost effective and non-regulatory manner, to produce less waste; to recover value from more of the waste that is produced; and to dispose of less waste,”‘ (DoE and WO 1995:12 cited in ECOTEC, 2001).

In October 1996, UK’s government implemented the landfill tax to reduce disposal of waste through a non-regulatory manner. “This Common Inheritance” indicated that government believed that both household and industry need a reform to change the way to dispose their waste.

The purpose of UK Waster Strategy is to set landfill disposal a proper price, which can reflect the environmental cost. For example, landfill activities have negative environmental impacts including methane emissions and groundwater pollution.

More specifically, the UK government expected the tax could lead to a reduction of waste to landfill from 70% to 60% by 2005. Several targets established by National Waste Strategy to manage the behaviour of industry and household.

 

UK national waste strategy targets

To stabilize household waste production at 1995 levels;

To reduce the proportion of controlled waste going to landfill to 69% by the year 2005;

To recover 40% of municipal waste by the year 2005;

The provision of close to home recycling facilities for 80% of the households by the year 2000;

For 40% of domestic properties with a garden to carry out composting by the year2000

 

Refund and Distribution

 A reduction of 2% Employers ‘National Insurance Contribution (NIC’s) is used to increase acceptance by industry and to “make  the landfill  tax revenue neutral.” The reduction of NIC’s is beneficial for the firms with insensitive employment and lower level of waste.

Partial funds generated from the tax were reinvested in waste management research and projects. ENTRUST are responsible for issuing the funds to eligible groups. In 1997, The Entrust (an environmental organization) Press stated that ₤8.5million raised by93 landfill operators were used for more than 1000 projects in 90(out of 440 registered bodies) environmental bodies. Under the Tax Credit Scheme, The specific distribution of the tax revenue is divided by 6 categories: land reclamation (13%),Land remediation(3.5%), Research and education (15%), environmental protection (46%),building restoration(22%), and administration (0.5%)


Tax Rate

The tax was one of the smallest taxes when it was introduced. After several years, the UK government decide to raise the tax rate dramatically to improve the behavioural impacts. The tax is a weight- based taxation. The calculation of the weight is used by a weighbridge and alternative methods, such as estimated amount of waste converted to weight.

Landfill Tax: Rates of Tax (£ per tonne)

Date of change Standard Rate Lower Ratea
01.10.96 7 2
01.04.99 10 2
01.04.00 11 2
01.04.01 12 2
01.04.02 13 2
01.04.03 14 2
01.04.04 15 2

Notes: a. The lower rate of tax applies to listed inactive wastes.

Source: HM Customs and Excise (2006)

Tax rate is planned to increase ₤3 per tonne each year until to reach ₤35 per tonne in a long term, which is designed to further reduce the landfilling of biodegradable municipal waste. According to UK’s government Budget 2005, between 1997-1998 and 2003-2004, the total amount of disposal waste to landfill declined 20%. The landfill tax was effective to reduce the landfilling waste.

 


 

Conclusion

The outcome of landfill tax is hard to measure, as the previous data was not precise. But we have a brief summary about the outcome from Benefit and Criticisms base on our research.

Benefits Tax brought some beneficial impacts.

First, tax increased the industry’s awareness of managing waste. A survey in 1998 revels that 1/3 firms believed that Landfill tax result in the development of waste management measures.

Moreover, survey shows that the introduction of tax lead to reduce 2/3 waste from business, councils and contractors. 50% interviewees stated that their disposal costs had increase 10% after the implementation of tax.

Criticisms As the landfill tax is an aggregated charge for total volume of disposal of waste. There is nothing criteria to manage waste production and to provide rewarding incentives for efficient household. In 2001, Ecotec stated that landfill tax increase the municipal waste, since people started to change the waste stream to avoid tax. For example, people can dispose the household waste or dumped the waste illegally which means people again little incentive for individual waste producers to reduce waste.

 

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