HM Customs and Excise 19
                                          17 March 1998

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ACTION TO IMPROVE ENVIRONMENTAL BENEFITS OF LANDFILL TAX

The Chancellor today announced a number of changes that 
are to be made to the landfill tax to make it more 
effective as an environmental tax.

*  the standard rate of landfill tax will increase from 
  7 pounds to 10 pounds per tonne from 1 April 1999; 

*  the lower rate is frozen at 2 pounds per tonne; and 

*  inert wastes used in the restoration of landfill sites 
  and quarries will be exempt from landfill tax from 
  1 October 1999.

These measures result from a review of landfill tax and 
its environmental  effects which  took account of the 
concerns of local authorities, environmental groups and 
the waste management industry. In the light of the 
emerging new national waste strategy and new European 
targets on the reduction of active waste landfilled, 
further consideration will be given as to whether further 
rate increases are necessary to help meet targets for 
reducing reliance on landfill.

The review also recognised the success of the Environmental 
Bodies Credit Scheme in funding environmental projects.  
Customs will consult with interested parties in 1998 to see 
whether the scheme could be further improved.  In particular, 
the Government is interested in examining how the scheme 
could be used to encourage more recycling.

Landfill tax will be brought into line with other taxes, 
like VAT or duties on drink, cigarettes or petrol, so that 
in future increases or cuts in the rate of tax can be brought 
in immediately after a Budget without having to wait for 
Royal Assent to the Finance Act.

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DETAILS

1.	The review, which received 530 representations, 
found that the landfill tax is playing an important role 
in highlighting the environmental costs of landfill.  
Recent research shows that almost a third of companies 
began or were considering waste recycling, re-use or 
minimisation as a result of the tax.  Recycling and re-use 
of construction waste is also at an all time high.

2.	The original rates of landfill tax were set to reflect 
the environmental costs of landfilling.  The proposed 
increase to 10 pounds per tonne retains the basis of that 
approach, and also recognises that higher rates of tax on 
active waste could be an important tool to help meet targets 
for reducing the amount of waste sent to landfill. The 
12 month notice of rate changes gives waste producers and 
local authorities time to consider alternative waste 
strategies such as minimisation, re-use and recycling.

3.	Respondents to the review also argued forcefully that 
a side effect of taxing waste soils and clays at the lower 
rate of landfill tax of 2 pounds per tonne has been a 
significant drop in the amounts of such waste available 
to restore landfill sites or to fill quarries.  The 
government has responded by proposing to create an exemption 
which will encourage the waste management industry to 
continue to carry out high quality restoration of land, for 
example making land fit for forestry or agriculture.  The 
delay in implementation will allow time for Customs to 
agree its practical application with the industry.  In the 
meantime, the lower rate is frozen at 2 pounds per tonne.

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NOTES FOR EDITORS

1.     Landfill tax was introduced on 1 October 1996.  It 
was the UK’s first tax with an explicit environmental 
purpose.  The current rates of landfill tax are 7 pounds per 
tonne for active waste and 2 pounds per tonne for inert waste.

2.     The Provisional Collection of Taxes Act (1968) (PCTA) 
allows tax rate changes announced in the Budget to be brought 
into effect by resolution before the Finance Act receives 
Royal Assent.  The PCTA includes, inter alia, VAT, Insurance 
Premium Tax and duties of Customs and Excise, but not the 
landfill tax.

3.   The Environmental Bodies Credit Scheme allows 
landfill site operators to claim a 90 per cent tax 
credit against donations they make to approved 
environmental projects subject to these credits not 
exceeding 20 per cent of their annual landfill 
tax bill.

4.	The revenue effect of this measure will, on an 
indexed basis, be a reduction in the revenue yield 
of -5 million pounds in 1998/99, and an additional 
revenue yield of 50 million pounds in 1999/2000 and 
60 million pounds in 2000/01. On a non-indexed base, 
there will be no revenue effect in 1998/99. The impact 
on RPI will be negligible.

5.     Details for traders are available in Budget 
notice BN 74/98, which is available from Customs and 
Excise Business Advice Centres and from the Customs 
and Excise Internet site.


Press enquiries only to HM Customs and Excise, 
Public Relations Office, New King's Beam House, 
22 Upper Ground, London, SE1 9PJ.  
Telephone:  0171 865 5468/5471

Others should contact their local Excise and Inland Customs 
Business Advice Centre, listed under Customs and Excise 
in the telephone book. [or the landfill tax helpdesk 
on 0645 128484 (local call rate applies)].

Customs and Excise Internet address: 
http://www.open.gov.uk/customs/c&ehome.htm

This news release can also be found at :
http://www.hm-treasury.gov.uk. Other Treasury material 
can also be found at this address.