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Call for natural resource tax

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

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.”

Readers' comments (5)

  • I would not employ this consultancy if that the best he can come up with.

    new materials are taxed by REACH, VAT, CCL, Carbon tax already, so why add one more tax just because its the easy option.

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  • Clarification: Clouth did this research for his Masters dissertation - so although he works for Resource Futures his research and conclusions do not reflect the consultancy's work.

  • Bernard Chase

    Not sure where to begin with this one...
    Best outcomes are derived from using the most appropriate feedstocks, ones that deliver lowest cost, greatest efficiency and which lead to the greatest opportunity for wealth creation. The civilisation we have today is based upon such continuous improvement in resource efficiency and wealth creation.
    Taxing people/things in order to force change is just plain wrong and results in unintended consequences, flawed outcomes and the squandering of resources.
    It is important to remember that every action has an equal and opposite reaction.

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  • Mr Clouth forgets the massive volume of metals sent overseas for reuse as the UK has no companies suitable to process these materials...such as zinc, copper, lithium's, as well as steel scrap.

    he needs to do 10 years "at the coal face" before offering theories.

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  • I appreciate the above comments and would like to respond. The research was conducted using empirical data on pricing and its effect on the amount of secondary materials utilised in the UK. It found that higher primary resource prices drive increased secondary material usage. Alongside this, if we want to further develop the circular economy and thus increase the environmental sustainability of resource usage, we need to find a way to compensate for the failure to account for the environmental externalities of primary resource consumption.

    Tax, although generally unpopular, is the most effective way of doing this. The landfill tax attempts to compensate for the environmental externalities of landfilling and has been incredibly successful, but we have no mechanism in place to deal with those at the ‘coal face’. The CCL and carbon tax deal with energy consumption, the latter of which doesn’t exist yet, VAT deals with sales and has no relation to primary resource consumption, and REACH deals with chemicals.

    If anyone would like a full copy of the thesis, then please contact me at or



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  • Gordon Brown revisited...penalise it, tax it..."neutral tax"....that what landfill tax was for and this failed its objective.

    Someone has to pay if its tax...who?

    think it through!

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