A natural resource tax has been called for in order to drive up the amount of materials that are reprocessed in the UK and move towards a circular economy.
Stuart Clouth (left), a postgraduate student at the University of Cambridge, came to the conclusion that a tax on virgin materials would “correct market inefficiencies” because increasing natural resource prices encouraged the use of secondary materials.
Clouth found this when researching the steel and paper markets for his Masters thesis with data from a range of sources including MRW’s markets data.
In an Insight for MRW, he said a natural resource tax could complement the landfill tax: “In combination with the landfill tax, it would lock materials into repeated cycles of use within national borders.”
Clouth explained that the tax level could be tweaked to respond to increasing natural resource prices; when they are low, the tax level could stimulate investment in materials to be reprocessed, and when the prices are high, the market could dictate the development of the circular economy.
He added that such a tax “would likely face public opposition”, but suggested “this could be relieved to a certain extent by ensuring that it is revenue-neutral, whereby income tax would be reduced by the same margin as a tax increase on resources.”