The chief executive of the CIWM, Steve Lee, says the industry must incentivise resource efficiency to get on “the front foot”.
Lee told MRW: “the ESA proposals would support our industry in the short to medium term but it is also essential that we focus on incentivising materials resource efficiency to put us on the front foot in the long-term”.
Speaking at a seminar on the recent ESA green tax report, Beyond Landfill, Lee said he supported variable VAT to incentivise a greater strategic management of materials. “The mechanism is there,” he added.
On the seminar panel, Julie Hill, heading up Green Alliance’s Circular Economy Task Force, asked “How can the VAT rate reflect the waste hierarchy?”
She suggested that differential VAT rates weighted for the impact of consumption could influence how products were designed for longevity, such as products with long warrantees.
VAT exemptions ‘not wanted’
VAT is determined at the European level and an EU consulation is underway exploring how to simplify the VAT system and keep it competitive across the member states.
Jacob Hayler, the ESA’s economist, said: “EU doesn’t want them [VAT exemptions], and they could suppress consumer demand in a recession.”
Lee also said he supported end-of-life levies, particularly for problem residual waste such as tyres, mattresses and cigarette butts.
‘Not a level playing field’
Wendy Wagler, head of tax for Veolia, said that, tax-wise, the waste industry was not a level playing field within Europe: “The UK is the only country in the G20 not to invest in [tax] relief for infrastructure - buildings, roads and fences that are needed for a facility.”
She said that basic infrastructure could be a heavy cost for developers, typically between 23% and 42% of a scheme. She argued Enhanced Capital Allowances should apply, which would be a 100% tax break for a year on the infrastructure investment, and it was up to DECC and HMRC to put this in place.