While the landfill tax escalator, which currently stands at £64 per tonne, is starting to disincentivise landfill disposal, extending this further beyond 2014 would severly penalise waste producers and is not the answer, according to the Environmental Services Association (ESA).

In its new report Beyond landfill: using green taxes to incentivise the waste hierarchy, the ESA argues that these costs to waste producers would outweigh the monetised environmental benefits.

The study estimates that cumulatively to 2020, landfill tonnages would only be 3% lower as a result if the escalator was increased to £104 per tonne in 2017.

“Even if we assume that all of this waste would not have arisen in the first place (rather than being diverted to alternative waste management processes), the resultant carbon savings would be valued at only 40% of the cost of the tax on waste producers,” the report states.

Instead, the ESA suggests developing a new set of taxes designed to move waste up the hierarchy, with a particular emphasis on boosting recycling rates.

Specific recommendations include a packaging levy that would sit alongside the packaging waste recovery notes (PRN) system to incentivise the reduction, recycling and recovery of certain materials, and a peat levy to help stimulate compost markets.

This would be balanced by various fiscal incentives such as enhanced capital allowances for investment in innovative material sorting technologies and a lower rate for Carbon Reduction Commitment (CRC) allowances for recycling and reprocessing activities.

Holistically, such levers would seek to incentivise the best environmental options within each level of the waste hierarchy – for example by encouraging high efficiency among energy-from-waste plants or high quality recycling systems.

The ESA also maintains that visibility needs to be built into the design of these taxes, arguing that it can make a significant difference to their impact.

“If levied at the point of purchase it could be more likely to influence consumer behaviour than if levied, for example, on retailers and hidden from consumers. This was key to the success of the plastic bag levy in the Republic of Ireland,” the study points out.

While any new set of domestic green taxes may have competitiveness implications, the ESA suggests that government could try to address this through designing a policy package which is revenue neutral overall and which includes offsetting fiscal measures, such as reductions in employment taxes.

Maxine Perella

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