Wales could have own Landfill Tax by April 2018

Wales could ‘switch off’ from the UK-wide Landfill Tax and bring in its own devolved tax from April 2018, a new document on the Wales Bill has outlined.

The ‘Wales Bill’, presented to Parliament on Thursday (20 March) by the Secretary of State for Wales, David Jones, and Chief Secretary to the Treasury Danny Alexander outlines that as part of plans to give Wales powerto control around £3 billion of tax revenue, it could be responsible for its own Landfill Tax by April 2018.

Details of a ‘new and unprecedented’ package of financial powers were first published by the government in November, and outline how the Welsh Government could claim control of its tax revenue, including the control of business rates, the ability to create new taxes, and some borrowing powers.

The Wales Bill now provides the legislative framework to implement these new financial powers.

Wales Bill details

According to the ‘Wales Bill: Financial Empowerment and Accountability’ document, written by the Secretary of State for Wales, the new law will see a ‘new funding stream [that] will comprise revenues from business rates, devolved taxes (a Welsh Land Transaction Tax and a Welsh Landfill Tax) and, subject to a referendum, a Welsh rate of income tax’.

In relation to Landfill Tax, the Wales Bill will allow the Welsh Government to have ‘complete control over whether and how to tax land transactions and waste disposed to landfill’.

The document outlines that ‘based on initial discussions with the Welsh Government, the intention is to “switch off” the UK-wide versions of the taxes insofar as they apply to Wales from April 2018’.

After this point, ‘an adjustment’ will be made to the block grant, to ‘reflect the reduction in revenues that the UK Government receives from these devolved taxes’.

The report reads: ‘A separate tax return for waste disposed in Welsh landfill sites would be likely to be required, depending on the design of the tax specified by the Assembly and the organisation tasked with its collection. The compliance burden on landfill operators in Wales will be determined by the rules that are set by the Assembly and the Welsh Government, arising from the design and administration of the Welsh tax on disposals of waste to landfill.’

It goes on to outline that there should be ‘little or no increase in the compliance burden for taxpayers operating at a single site in any part of the UK: there will be a separate set of rules for Wales, Scotland and the rest of the UK’.

However, it warns that those operating landfill sites in both Wales and elsewhere in the UK may experience an increase in ‘compliance burden’, as up to three Landfill Tax returns may be needed in future where one is needed at present.

Landfill Communities Fund

In terms of the Landfill Communities Fund, which aims to address some of the impacts of landfill activity by improving the environment in the vicinity of landfill sites, once Landfill Tax is devolved to Wales, landfill operators will no longer be eligible for a UK Landfill Tax credit, as it will only be available for contributions benefitting the environment in England and Northern Ireland.

However, for two years after the devolution of this tax, any unspent funds held by environmental bodies will be allowed to be spent on projects in England, Northern Ireland and Wales.

The Wales Bill states, however, that ‘in the unlikely event that the UK fails to meet its landfill reduction target solely because of changes to Landfill Tax policy in Wales, the [UK] Government will seek to recover this cost from the Welsh Government’.

It is not yet known what the cost of devolving Landfill Tax to Wales will be.

The UK government will reportedly consult with Welsh ministers before ‘determining a final date for switching off the UK taxes in Wales.’

‘Delivering a stronger economy and a fairer society in Wales’

Speaking after introducing the Wales Bill, Secretary of State for Wales David Jones said: “The Wales Bill introduced into Parliament… is a major milestone in Welsh devolution. The package of tax and borrowing powers it devolves to Wales should be used by the Welsh Government to grow the Welsh economy, give Wales a competitive edge and help the people of Wales feel more secure about having a better future.

“Just as important, it will make the Assembly and the Welsh Government more accountable to the people who elect them. For the first time, they will be responsible not only for the money they spend but for raising some of that money as well. The bill will also make Assembly elections fairer and more equitable.

“The swiftness by which we have introduced this bill is testament to this government’s desire to see the bill passed before the end of this parliament and provides the opportunity for devolved governance in Wales to be fairer, more accountable and, crucially, more able to support economic growth.”

Chief Secretary to the Treasury Danny Alexander added: “I am delighted that we have been able to introduce the Wales Bill to Parliament…

“The package of financial powers in this bill will provide powerful new tools for Wales to exercise greater control over its future. The bill also significantly strengthens the Welsh Government’s financial accountability and transparency. The powers in this bill will help future Welsh Governments to deliver a stronger economy and a fairer society in Wales.”

The Wales Bill will also extend assembly terms permanently from four to five years, making it ‘less likely that Assembly elections will coincide with Westminster parliamentary elections in future’, and prohibit Assembly Members from also being MPs.

Read the Wales Bill command paper.