CE5

9 March 1999

GOVERNMENT SUPPORT FOR SUSTAINABLE WASTE MANAGEMENT

A #3 rise in the standard rate of landfill tax to #10 per tonne from
1 April 1999, followed by a landfill tax escalator of an additional
#1 per tonne each year, sends a tough signal to waste managers to
look for more environmentally friendly alternatives to landfill.

The standard rate tax escalator will apply for at least a further 5
years when, by 2004, the rate will be #15 per tonne. Advance notice
of these increases will help those affected plan their waste
management facilities on a more long-term basis.

The Environmental Bodies Tax Credit Scheme has generated
contributions of around #72 million in 1997/98 from the private
sector towards various environmental projects. Over 36 per cent of
contributions presently go to projects which encourage the
development of more sustainable waste management. To further promote
this, explicit provision will be made for "recycling" in the list of
approved projects which can benefit under the scheme.

This year's rate increase means that over #20 million additional
funding is available, through the Environmental Bodies Credit Scheme,
to support projects which achieve lasting community and environmental
benefits and advance more sustainable waste management practices.
This innovative scheme reflects the Government's policy to encourage
the greatest possible private sector involvement in promoting and
protecting the environment. Changes to the scheme's rules will make
it easier to claim tax credits, which will encourage landfill
operators to increase their support of projects benefiting the
environment.

DETAILS

Landfill tax

Landfill tax is a key part of the Government's forthcoming Waste
Strategy, to be published in May 1999. The new Waste Strategy will
put the UK on course towards the sustainable waste management system
that we need to resolve one of the key environmental challenges of
the next century.

The Waste Strategy involves a programme of increases in landfill tax
to encourage the development of alternative waste management
practices. The tax on a tonne of active waste over the next six years
will be:

1999/2000   2000/2001   2001/2002  2002/2003   2003/2004   2004/2005

   #10         #11         #12        #13         #14         #15

The rate increase builds on the important role played to date by the
tax with almost a third of companies considering waste minimisation,
re-use and recycling following its introduction. Analysis to date
suggests that a long term programme of increases in landfill tax
could significantly reduce the proportion of waste expected to be
landfilled.

Recycling

As tax liability rises due to increased tax rates more funds become
potentially available under the scheme. Operators can claim up to 90
per cent tax credit against donations they make to environmental
projects, subject to these credits not exceeding 20 per cent of their
annual landfill tax bill. From 1 August 1999 operators using the
scheme will have up to an additional month every quarter to claim tax
credits. They can also have contribution years that match their
accounting years. Further technical changes will be made to give
greater transparency.

The lower rate of tax has had effects, with the re-use and recycling
of construction waste at an all time high. However, it has also led
to a shortage of materials for the restoration of landfill sites, in
particular for filling mineral workings, which has an adverse
environmental impact. To address this problem, an exemption for inert
waste used to restore landfill sites and fill working and old
quarries (announced last Budget) will be operative from 1 October
1999.

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 per tonne for active waste and #2 per tonne
for inert waste.

2. The changes have the following revenue implications:

- the net yield of this package (increase in standard rate, exemption
  for inert waste used for restoration) is expected to be #100
  million per year in additional tax.

- each future #1 increase in the standard rate raises an additional
  #45 million per year.

3. Details for businesses are in Budget Notice 15/99, 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 5471/5472

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.hmce.gov.uk

This news release can also be found at :
http://www.hm-treasury.gov.uk

Other Treasury material can also be found at this address.

# = pounds sterling