Incoming Welsh Landfill Disposals Tax will provide ‘stability’ to businesses

The incoming Welsh Landfill Disposal Tax, one of the first new Welsh taxes in almost 800 years, received Royal Assent last week, hastening its introduction west of the border.

The Landfill Disposals Tax (Wales) will replace the current central landfill tax when it is devolved in April 2018, with revenue raised being used to help fund public services in Wales.

The new tax is largely the same as the current system, but 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 bill received Royal Assent on Thursday (7 September), with First Minister of Wales Carwyn Jones applying the Welsh Seal to the bill. Jones said:  “This Act is another important step in our devolution journey as we prepare for the introduction of tax powers in April 2018. 

“Next year will see the further maturing of devolution as we take on responsibility for raising a proportion of our budget to spend on public services in Wales. 

“Landfill disposals tax and land transaction tax will be the first Welsh taxes for almost 800 years. Wales is at the forefront of waste policy and landfill disposals tax is an important element in achieving our ambitious goal of a zero waste Wales.”

Tax will provide ‘stability and reassurance’ to businesses

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. Rates for the new Landfill Disposals Tax will be announced in October.

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

Explaining how the new tax will work, Welsh Finance Secretary Mark Drakeford added: “There is a clear public interest in ensuring the new tax systems we are creating for April 2018 are recognisable to those who will have to operate them on a daily basis. There will be similar processes and an approach to tax rates which will provide stability and reassurance to businesses.

“The Act is designed to be up to date, simple and clear to apply, reflecting established practices and will be relevant to Wales.

“However, a key difference between the existing landfill tax and landfill disposals tax is that our Act enables tax to be charged on unauthorised disposals of waste in order to provide a financial deterrent against undertaking this activity. Unauthorised disposals of waste blight our communities; they are a potential source of tax evasion and place legitimate waste businesses at a disadvantage.

“This activity is unacceptable; I want to encourage individuals to take their waste to a registered landfill site and pay a fair share of tax which contributes to the funding of our public services in Wales.”

The Welsh Government is also establishing a Landfill Disposals Tax Communities Scheme, which will support local projects that promote or improve the social or environmental wellbeing of communities affected by the disposal of waste to landfill.

More information about the new Landfill Disposal Tax can be found on the Welsh Government’s website.