Wales will lay a bill before the National Assembly to devolve landfill tax to the country, adding a third higher rate to the charges.
Landfill disposals tax, like the existing landfill tax which is currently collected in Wales and England, will be a tax on the disposal of waste to landfill.
It will be payable by landfill site operators which pass these costs on to waste operators.
Landfill tax has two rates – a lower rate for qualifying ’waste fines’ and a standard rate for all other material. But the Welsh version will also introduces a third tax rate for ’unauthorised disposals’, which is expected to be higher than the standard rate.
The Welsh Government says this will act as a financial deterrent to illegal waste activity and tackle a potential source of tax evasion.
Otherwise the bill will provide a broadly consistent approach to the existing landfill tax to provide stability and reassurance to businesses and minimise the risk of waste tourism.
But it will seek to improve the current regime by making the rules clearer and easier to understand, by addressing current areas of confusion and uncertainty.
There are currently 25 landfill sites in Wales operated by 20 landfill site operators. The Office for Budgetary Responsibility forecasts that landfill tax will generate £27m in 2018-19 for the country.
Some of the revenue raised from landfill disposals tax will be allocated to the Landfill Disposals Tax Communities Scheme, which will be set up before April 2018 to replace the existing Landfill Communities Fund.
Funding will be distributed to projects which focus on biodiversity, waste minimisation efforts and other environmental enhancements. Further details about how the scheme will be developed will be published shortly.
An announcement about the rates for landfill disposals tax will be made closer to April 2018, taking into account economic conditions and priorities at the time.
The tax will be collected and managed by the Welsh Revenue Authority working with Natural Resources Wales on compliance and enforcement.
Finance secretary Mark Drakeford described the bill as “an important step towards the devolution of tax to Wales”.
He said: “By replacing landfill tax with landfill disposals tax from April 2018, public services in Wales will continue to benefit from the revenues raised by this tax. Wales is at the forefront of waste policy and landfill tax is an important element of achieving our goal of a zero waste Wales.
“We have worked closely with stakeholders in developing this bill. It is simple and clear to apply; reflects established practices; is up to date and relevant to Wales.”
The Landfill Disposals Tax (Wales) bill is the third of three to establish tax arrangements in Wales and is expected to pass into law in April 2018.
It comes two months after the Land Transaction Tax and Anti-Avoidance of Devolved Taxes (Wales) bill was introduced.