The Treasury is dropping its proposals to increase the rate of landfill tax paid on incinerator bottom ash.
Last year (April 2009), the Treasury launched a consultation entitled Modernising Landfill Tax Legislation and proposed to tax incinerator bottom ash at the higher rate for active waste, which is currently £48 per tonne, as opposed to the lower rate for inactive waste which is currently £2.50 per tonne (see MRW story).
After considering waste industry stakeholder views on the proposals, Treasury Secretary Sarah McCarthy Fry said: The Government has concluded that bottom ash and fly ash from wood or waste combustion will remain eligible for the lower rate of tax, as will those from coal combustion when they are landfilled in a site containing no other waste.
Most councils that replied to the consultation said raising the tax would be contrary to its aims because it would remove any incentives to investing in energy from waste (EfW) that deal with municipal waste.
Speaking about the decision not to increase landfill tax on incinerator bottom ash, Local Authority Recycling Advisory Committee policy adviser Andrew Craig said: We do not think that bottom ash should be subject to a high rate of landfill tax because to do so would increase the cost to local authorities and will not provide significant environmental gain. In the longer term, once we no longer use landfill as a primary means of waste disposal, the Government could use legislative instruments such as taxation to tax EfW plants that do not offer a low efficiency conversion for waste to energy. But plants that offer a high efficiency conversion should not get taxed.
These are important debating points, and we are happy to debate them with [environmental campaign groups] Friends of the Earth or Greenpeace.
FoE resource campaigner Julian Kirby said he was disappointed with the Governments decision. Incinerator bottom ash is not an inert waste and should not benefit from a lower rate of taxation, he said. Plans to continue taxing it at the lower rate is in effect a book-cooking subsidy designed to prop up costly and wasteful incinerators at the expense of more sustainable schemes. The UK currently burns or throws away £650m of valuable resources a year. The Government must rethink its tax regime to ensure more waste is prevented, reused and recycled instead of just being burnt and dumped in a hole in the ground.
A Waste Recycling Group spokesman said: The Government has clearly listened to the voices which warned that a significant increase in the tax on incinerator bottom ash could seriously distort the economics of EfW treatment facilities. An increase as originally proposed could have undermined councils, and the UKs, ability to meet diversion targets under the Landfill Directive. The role of EfW, in tandem with high recycling rates, is seen across Europe as an essential part of sustainable waste and resource management strategies, as well as positively contributing to renewable energy and climate change commitments.