The Local Government Association (LGA) has urged the Treasury to freeze Landfill Tax at £72 per tonne in the upcoming Budget (19 March).

The escalating Landfill Tax rises in price year on year to act as a deterrent to sending waste to landfill (and instead promote more sustainable practices such as recycling). It is scheduled to rise from the current rate of £72 per tonne to £80 per tonne in April 2014, however the LGA argues that it should be frozen before it reaches this new level.

It insists there is ‘no evidence to suggest an increase in Landfill Tax will increase recycling levels’. Further, the LGA argues that money earned from the tax should be used to reinvest in new waste technologies, rather than going into Treasury coffers.

A firmer line than last year

In its budget submission, the LGA asks for Landfill Tax to be frozen at £72 per tonne, arguing that a rise to £80 per tonne will see householders ‘pay £30 towards landfill tax in 2014/15’. The body further argues that freezing the tax at its current rate could save taxypayers ‘more than £200 million’ by 2020.

Councillor Mike Jones, Chair of LGA’s Environment and Housing Board, said: “Instead of using the receipts from the tax to boost recycling technologies and reward residents for the gains made in recycling levels, the Treasury has held onto receipts.

"In its present form, landfill tax is punishing taxpayers, who are paying £30 per household every year but seeing no returns.

"We need a clear indication from the Chancellor that this tax will be frozen at its present rate, with the money raised from it returned to taxpayers and invested in growth."

Interestingly, the LGA is taking a firmer line than in March last year when it submitted a similar request to the Treasury asking for the tax be frozen at £80 per tonne.

The 2013 submission read: ‘Freezing the landfill tax at the 2014/15 rate would help contain council costs and the burden on the local taxpayer. The rate at this point will be £80 per tonne of waste landfilled, which would continue to provide an effective incentive to divert waste from landfill.’

Indeed, it argued that if the rate was frozen at 2014/15 rates it could provide a saving ‘in the region of £70 million and ensur[e] the overall cost increases for waste management are contained in that year at three per cent’.

Resource has asked the LGA why it has changed its stance since last year, but has not yet received a response.

Opposing Views

The calls oppose those made by the Seven Association Alliance (SAA) – a coalition of seven manufacturing organisations, representing 6,100 companies in the plastic, rubber, metal, and other material production industries – which has urged the Treasury to raise Landfill Tax to £200 per tonne by 2020.

In an open letter to chancellor George Osborne, the SAA argued that ‘the UK is one of the worst in the EU for relying on landfilling’ and bringing valuable resources back into use, and as such suggests a substantive increase to promote more sustainable practices.

While there has been silence from the Treasury about whether the Landfill Tax will rise or remain at the 2014/15 rate of £80 per tonne in future, the Office of Budget Responsibility previously estimated that revenue from Landfill Tax will rise from £1.5 billion in 2014/15 to £1.6 billion in 2015/16.

The value for Landfill Communities Fund is also expected to ‘remain unchanged at £78.1 million’, which suggests the Treasury will be retaining a larger proportion of the Landfill Tax than previously.

Landfill Tax across the UK

The face of UK Landfill Tax will soon change however, as next year Scotland will be responsible for its own Landfill Tax.

A Landfill Tax bill, which passed though the Scottish Parliament in October last year, will replace the UK Landfill Tax in Scotland from 1 April 2015.

From then, the Scottish Environmental Protection Agency (SEPA) will be responsible for administering Landfill Tax in Scotland.

Scotland is also setting up an independent authority to collect devolved taxes, and will introduce a ‘Scottish communities fund’ aimed at supporting environmental communities, and helping communities ‘in close proximity to landfill.’

A similar devolutionary package is being considered for Wales. Should it pass, they will be given control of around £3 billion of tax revenue, including Landfill Tax.

While the UK government would ‘remain responsible for macroeconomic policy’, the report asks that ‘Landfill Tax should be devolved to the Welsh Government with Welsh Ministers being given control over all aspects of the tax in Wales.’

Read more about the Scottish Bill or the proposals for Wales.