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I found landfill tax would be very interesting and necessary for the society. In UK threw away a staggering 22.6 million tons of rubbish in 2004/5; in fact, Britain sent the same amount to landfill as the 18 EU countries with the lowest landfill rates combined, despite these places having twice the population of the UK. Many people in UK are concerning that we are running out of land for landfills.

Hence, in 2006 UK started to impose landfill tax by charge extra money per tons of garbage and landfill operators are the ones who responsible landfill tax. It was referred as the “the UK’s first tax with an explicit environmental purpose”[i][ii]. UK government promise to use the tax revenue on waste management system which can recycle 25% of household waste. An interesting thing is that the government cut employers’ national contribution insurance to soft the tax’s impact to society.

A tax or fee imposed on landfills or other disposal facilities normally is as a means of raising general revenues, to generate funds for inspection programs or recycling program, or as a means to make direct disposal not the most attractive ways to handling garbages. Landfilling is discouraged due to a number shortages[1]:

• Climate change caused by landfill gas from biodegradable waste
• Loss of resources
• Constraints on areas suitable for landfill sites
• Loss of recyclable components of waste landfilled
• Uncomfortable feelings of citizens: nimby issues.

In 1999, the UK government update its strategy with “a way with waste”. It increase the tax rate to 10 pounds per tonne and also introduced “Landfill Tax accelerator” which would raise tax rate 1 pound each year until 2004. Following that, 2004 to 2007 landfill tax increased 3 pound per year next three years. After 2008.the chancellor announced that there will be 8 pounds increase each year until 2013. Floor price for landfill tax is 80 pounds per tonne in the year from 2014 to 2020.

Allocation of Revenue
With regard to allocation of landfill tax revenue in the UK, its introduction was in alignment with a reduction in employers’ national insurance contributions which in case it’s only a transfer of welfare. As respect to the UK landfill tax credit scheme , it was aimed at encouraging landfill operators to support projects with environmental objectives, such that tax credits can be claimed in respect of funds used (up to a maximum of 20% of their tax liability).  This scheme was halted and the UK treasury has yet to decide what to do with the extra revenue generated (EEA, 2005).

Evidence and Effectiveness of UK landfill tax:

The successfulness of the landfill tax in diverting waste away from landfill sites is difficult to assess. There are also other instruments are introduced at the same time, such as landfill bans.  In the case of the UK, the tax has not been set high enough to result in a significant change, however in countries where the tax is high (for example Denmark) other instruments have also been introduced at the same time.  Landfill taxes have proved to be a useful source of funding for developing an effective infrastructure for the waste (EEA, 2005).

UK has the highest percentage of waste being landfilled, but the tax rate of landfill was among the lowest. The evidences to prove the success of UK landfill tax was mixed. In 2000, research shows that strong evidence of increase of recycling activities and significant decrease of construction and demolition wastes. But other articles, Martin and Scott (2003) states that UK municipal wastes kept a rising increase rate.

Undesirable outcomes also comes along with landfill tax. Because of the tax, many wastes went to unlicensed landfill sites. Local institutions are often constrained by long term contracts that they can’t accelerate the pace of change. Obviously, the institutional power was not strong enough to enforce every landfill sites obey from the law. Another odd things is, by only add burden to the landfill operator, landfill tax has least impact on citizens and non-construction companies who are the largest contributors to municipal waste. For citizens, landfill tax is integrated with council tax, which is a flat rate. It won’t provide enough incentive for citizens to reduce waste. To those companies, the landfill tax is too small that companies don’t even bother to care.  However, behaviors such as reducing over packaging or buying unnecessary products and recycling should be the ultimate purpose of tax.

Institutional power is also a concern.[iii] Loophole in the tax also provide incentives for unofficial dumps. But due to constrain of resources, this kind of behavior cannot be fined or forbid completely. Also, local authorities also can’t find its way to reduce tax liability if anyone increased amount of recycling.

Future

Besides increasing the tax rate for landfill, UK government also announced that landfill allowance trading scheme would be removed after scheme year of 203. This move is for small businesses who may not have advantage to have allowances.

Under the EU Landfill Directive, the UK is obligated to reduce the amount of biodegradable municipal wastes sent to landfill based on the amount of this material landfilled in 1995 to 75% by 2010, to 50% by 2013 and to 35% by 2020. The definition of municipal waste recently changed and the tonnage of the new targets is given below[iv]:

Following discussions with the European Commission, Defra has changed the definition of municipal waste, and now includes some Commercial and Industrial waste as well as most of the existing local authority collected waste.

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