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Policy Exchange: Incineration tax will encourage recycling

Incineration tax should be introduced in the UK to encourage recycling, according to a new report by think tank Policy Exchange.

The report called A wasted opportunity? How to get the most out of Britains bins recommends the radical overhaul of the waste system to reduce the cost to Britains households, improve recycling rates, increase local authority efficiency and expand the proportion of the UKs energy needs met through waste.

One of the recommendations from the report states that landfill tax should be reformed into a broader waste tax covering all disposal processes in line with the waste hierarchy. The report states: By introducing taxation on incineration a clear preference is signalled to reduce, reuse, recycle or compost where possible. To limit uncertainty, escalating rates should be set over a long enough period to encourage investment.

The Policy Exchange argue that the Government should set a tax and regulatory regime which clearly establishes preferences over how waste is treated, with the highest rate for the least preferred option, landfill, to enable the private sector to respond to the signals given by the Government through the tax framework.

It states: By incentivising energy from waste over landfill, but still providing an incentive to recycle rather than incinerate, the tax structure mirrors the waste hierarchy closely.

The report also recommends that the Government should abolish the present waste collection and disposal authorities and create single-tier waste authorities in England. The Policy Exchange suggest that by simplifying local governance of waste in many areas, clear incentive structures can efficiently bind in the key actors in the waste system: households, local government and the waste industry. It also calls for the Government to abolish tonnage targets for local government which would remove a major perversity in the system as well as promoting economies of scale.

Climate change technology AEA Technology waste management consultant Adam Read said he welcomed the reports recommendations. He said: This report covers all the key areas that we have been discussing of late in the waste management sector and seems to have been designed with a political audience in mind. I was arguing to create more unitary authorities back in 1995 when I was doing my PhD thesis. The positive of having a unitary authority is that you can deliver a series of contracts in unison - designed in a holistic way with the savings from one service area invested in another. More expensive recycling collections can save significant treatment costs later on for example. You also avoid all the politics.

Read said the idea of an incineration tax was a radical policy that could see a potentially massive change but could be undermined if the evidence base for setting the levels was inappropriate.

He continued: The advantage of differential taxation for different treatment systems is that it sends out a strong message to the market about which technologies have the highest negative environmental impact and which ones the Government favours. But this message will only work if the science underpinning the relative advantages and disadvantages of one approach over another is quantified accurately in monetary terms.

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