Devolved Welsh landfill disposals tax to create deterrent for criminals

A new bill detailing plans to devolve the landfill disposals tax to Wales from April 2018 is due to be laid out before the Welsh National Assembly today (28 November).

The Landfill Disposals Tax (Wales) Bill, which is expected to receive royal assent next summer, suggests that the new tax would be largely consistent with the existing landfill tax collected in England and Wales, although the Welsh Government says it will make the rules clearer and easier to understand, in order to reassure businesses and mitigate the risk of waste tourism.

The current two tax rates stipulated by the landfill tax, one lower rate for qualifying materials and a standard rate for other materials, will be maintained, but the bill will see the addition of a higher third rate for unauthorised disposals in a bid to deter illegal waste activity and tackle potential tax evasion.

The bill is one of three introduced to establish devolved tax arrangements in Wales, with the other two proposing the introduction of a land transaction tax and the ability to vary income tax in Wales, as well as the creation of the Welsh Revenue Authority, which will be responsible for collecting new Welsh taxes.

The proposed landfill disposals tax, which the Office for Budgetary Responsibility forecasts will generate £27 million in 2018/19, would tax the disposal of waste to landfill in Wales and would be payable by the 20 landfill site operators running the 25 active landfill sites in Wales, with the costs falling on waste operators.

Further announcements about these rates will be made closer to April 2018, taking actual economic conditions into account.

A portion of the revenue raised from the new tax will be allocated to the proposed Landfill Disposals Tax Communities Scheme, which is earmarked to replace the Landfill Communities Fund in April 2018 and will distribute funding to projects focused on biodiversity, waste minimisation efforts and other environmental projects in Wales.

An ‘important element’ in achieving a Zero Waste Wales

Commenting on the bill, Welsh Finance and Local Government Secretary Mark Drakeford said: “This is the third of three bills to establish tax arrangements in Wales and is an important step towards the devolution of tax to Wales. For the first time in 800 years, we are developing and implementing a tax regime that is more directly suited to the needs of our country and our people.

“By replacing landfill tax with landfill disposals tax from April 2018, public services in Wales will continue to benefit from the revenues raised by this tax. Wales is at the forefront of waste policy, and landfill tax is an important element of achieving our goal of a zero waste Wales.

“We have worked closely with stakeholders in developing this bill. It is simple and clear to apply, reflects established practices, is up to date and relevant to Wales.”

The joy of tax

The introduction of the landfill tax in England and Wales in 1996 has contributed to a reduction in actual waste sent to landfill in Wales in recent years. The tax, originally set at £7 per tonne for active waste in 1996, rose to £80 per tonne for active waste in 2014/15, before being brought in line with the Retail Price Index (RPI). It now stands at £82.60 per tonne of active waste, and £2.60 for inactive waste, such as soil and rocks.

The tax aims to dissuade businesses from sending waste to landfill and to seek alternative sustainable solutions for their waste disposal, as well to reduce the financial burden of landfill on local authorities (LAs).

The landfill disposals tax consultation, the third in a series of consultations set up to obtain feedback on the plans for devolved taxes after the passing of the Wales Act in 2014, outlined that the rise in landfill tax since 1996 had made a significant contribution to the reduction in the proportion of waste sent to landfill, with the total amount of waste sent to landfill falling by 52 per cent in Wales between 2001 and 2013.

Furthermore, since 2011/12, the annual landfill cost to Welsh LAs fell by more than £13 million – a decrease of 23 per cent – according to figures obtained by BBC Wales. In addition to this, the total weight of landfill dropped from 641,000 tonnes in 2012/13 to 450,000 tonnes in 2014/15 – a drop of 30 per cent.

The tax forms part of the Welsh Government’s Towards Zero Waste Strategy, which saw Wales hit a recycling rate of 57 per cent in 2015 and aims to see LAs recycle 70 per cent of their municipal waste by 2024/25.