No level playing field = no green growth!
30th July 2012
The potential for green growth in the UK is significant as we transform from landfilling the majority of our waste to the more sustainable options of recycling and recovering energy from it. For this change to be realised, around £20 billion needs to be invested over the next ten years in modern technology and infrastructure. If we manage to achieve this, it is estimated that over 80,000 new jobs could be created and the construction industry could receive a much needed injection of new projects. As is always the case, however, investors will only commit their funds if they are confident that the underlying market is stable and this is especially true for the waste industry which needs high levels of capital investment.
To create market stability, the Government – once it had adopted the European Union legislation favouring landfill diversion – introduced Landfill Tax. This tax was designed to encourage waste producers to move away from landfilling towards recycling and recovery. With the present rate at £64 per tonne, the tax is doing what it was introduced to do and waste producers are seeking better alternatives. However, as with all taxes, the higher the level the more temptation there is for some to try to avoid paying what is due.
Some members of the waste industry are incorrectly classifying ‘active’ waste as ‘inert’, which means they are landfilling at dramatically reduced cost. Waste that is classed as inert can be landfilled at a cost of just £2.50 per tonne. The exploitation that has been taking place has forced HMRC (Her Majesty’s Revenue and Customs) recently to clarify the landfill tax legislation to the market.
Discussions are continuing between HMRC and the waste industry to find more objective ways of defining whether waste that has been through a pre-treatment process is still ‘active’ and should therefore attract the higher tax of £64 per tonne or if it can be classed as ‘inert’ and taxed at £2.50 per tonne.
What may not yet be fully appreciated by the Authorities is that without clarity and adherence to regulations, the level playing field that is required to attract and sustain inward investment to the industry is lost. This inevitably leads to a reduction in new infrastructure, a lack of green growth and a continuation of landfilling.
If the Environmental Agency fails to enforce permit conditions or HMRC does not prevent tax avoidance, the market becomes unstable. If the Government wants green growth and a sustainable future it should tackle the issues around tax avoidance within the waste industry. This will enable reputable companies to invest in a sustainable future and will deliver significantly improved returns in new tax receipts.Tweet