"Blanket Landfill Tax Bad for Business, Local Government and Climate Change"

The environmental consultancy Eunomia Research & Consulting has published a report that quantifies the financial impacts of the recent rise in the Landfill Tax (LfT) Escalator. The Impact Assessment of the Landfill Tax Escalator follows a paper published earlier this year by the company that called for a lower rate of Landfill Tax for wastes that have been 'biostabilised' at Mechanical-biological Treatment (MBT) facilities.

The report claims that whilst HM Treasury will see revenues from the LfT rise by around £4 billion in the period 2008-20, the associated 'revenue-neutral' promise (the assertion that taxes would eventually find their way back to businesses and local authorities) is weakening. Furthermore, Eunomia suggests that, contrary to one of its stated objectives, the new Escalator may result in the UK missing its targets under Article 5 of the EU Landfill Directive.

The goal of the Impact Assessment undertaken by Eunomia was to estimate the impacts of the new Escalator on both local authorities and on businesses. The company argues that companies who adhere to more sustainable waste treatment methods will not receive a reward for doing so. As such, a company's incentive to use greener methods of waste management is negligible.

One of the report's authors, Dominic Hogg of Eunomia, commented: " Treasury does not seem to have looked at options for changing the tax's structure. It has merely looked at increasing the tax. Treasury needs to consider whether the tax, as currently structured, is properly aligned with its own Statement of Intent on environmental taxation. Not only were lead times insufficient for those dealing with waste to change their plans, but the blunt structure actually discourages the introduction of new technologies which could be introduced quickly, and with positive implications for climate change. "

Another of the authors, Adam Baddeley, said of LfT: " This is an instrument which should be used to encourage positive environmental change, but where stabilising waste is concerned, the Treasury clearly has a blind-spot. We reiterate our call for a lower rate of LfT to be applied to waste that achieves a predefined level of stability. This appears to be a cost-effective change to the existing tax structure given the environmental benefits which are likely to be delivered. "