Scottish Government launches consultation on devolved tax

The Scottish Government has launched a consultation on a devolved tax which aims to encourage greater use of recycled and other sustainable materials in the construction industry.

Construction and demolition wasteThe consultation will inform future legislation that will replace the UK Aggregates Levy, which is applied to newly quarried products such as sand and rock as well as commercially in housebuilding, infrastructure, and landscaping.

The Government is inviting comments on issues including:

  1. The rationale for and scope of the tax and whether exemptions and reliefs should be included in legislation
  2. Operational arrangements, including how best to make use of online technology
  3. The case for introducing a new sustainability fund and what type of projects such a fund could aid

Tom Arthur, Public Finance Minister, said: “The extraction and production of aggregates like crushed rock and sand creates and supports jobs, including many in our rural communities.

“However, we know that extraction of new materials can also have an environmental impact. These proposals are intended to drive up recycling and reuse rates, helping the construction industry meet its climate and sustainability commitments, and protecting Scotland’s natural environment by reducing the need for virgin materials.

“It will also support our ambitious National Strategy for Economic Transformation objectives for green and sustainable economic growth and result in a greater proportion of the Scottish Budget being directly raised in Scotland.

“I want to ensure this tax is well-designed, takes full account of the Scottish context and maximises opportunities offered by devolution. I would encourage all interested people and organisations to respond to this consultation.”

Scottish Aggregates Levy Bill

The Scottish Government set out its commitment to create a Scottish Aggregates Levy Bill, to replace the UK Aggregates Levy, in the 2022-2023 Programme for Government on 6 September. Draft legislation is expected to reach Scottish Parliament before the end of year, with the introduction of the levy provisionally scheduled for 2025.

As with other fully devolved taxes, rates will be set at a later date through secondary legislation, depending on factors including economic and environmental considerations.

In Scotland, devolved tax is seen as a way to improve the financial accountability of devolved administrations and encourage the choosing of policies that stimulate local growth by devolving some tax powers away from Westminster. Scotland, Wales, Northern Ireland, and some English Local Authorities have devolved tax structures.

Collection and management of the devolved tax will be administered by Revenue Scotland and the Scottish Fiscal Commission estimates that the 2022/23 Scottish share of revenue from the UK Aggregates Levy is £59 million.

Revenue Scotland has responsibility for the collection and management of the devolved taxes – currently Land and Buildings Transaction Tax and Scottish Landfill Tax, which came into effect on 1 April 2015. Revenue of almost £5 billion has been collected. Revenue Scotland is accountable to the Scottish Parliament and operates independently of the Scottish Government.

Read the full consultation here.