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Mind the landfill tax gap

Many significant debates on the future of the industry depend on the firm foundation of data: the need for it or getting hold of it.

Interpretation of data is another issue. For example, Eunomia’s Dominic Hogg has recently taken issue with the widespread belief that Sweden is a great recycler. In fact, its recycling rates are are not far off the UK’s as a whole and is well down on Wales, for example. That is because so much material goes to energy-from-waste (EfW) plants (aka incinerators).

What it does mean, though, is that Sweden landfills virtually nothing. The reason it imports refuse-derived fuel (RDF) is that it built so many EfW plants. So it is easy to see why it might be better to recycle less and provide more home-grown fuel for the incinerators. Ultimately, though, that cannot be a sustainable direction of travel. Eunomia is about to publish its latest regular report on EfW capacity in the UK and Europe. At least all this material is being measured.

As MRW reported in November, the Environment Agency’s (EA) total for material going to landfill was around 44 million tonnes in 2015, based on records of sites, permits and so on. But according to HMRC landfill tax receipts, 31 million tonnes went into the ground that year. As has been pointed out by Hogg and others, this 13 million-tonne gap is pretty big – especially as the two totals were pretty similar at the start of the decade. But it is unclear why there has been such a divergence.

Some discrepancy could be accounted for by land restoration. Or ‘mis-description’ of waste. Or just plain fraud. The size of the gap offers a number of reasons. I can only presume the EA and HMRC do not share information properly; if they did, the gap surely could not be as big. Is HMRC being short-changed because it doesn’t know how many landfill sites we have? Does the EA know which sites it believes are landfilling at the standard rate are meant to be paying tax?

The ‘real’ figure must be somewhere between the two. Let’s assume 25% of the gap should, after all, be taxable. Fag-packet calculation tells me that would accrue £250m. That’s the same amount offered four years ago by Eric Pickles to try to persuade local authorities to return to weekly household collections. This time that sum could be spent on something the sector actually needs.

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