UK Landfill Tax set too low to reduce waste

A House of Commons select committee report says that the Landfill Tax, introduced in 1996, was set at too low a level to change waste disposal patterns. The report supports the principle of environmental taxes, but identifies lessons to be learnt from the Landfill Tax.

The Environment, Transport and Regional Affairs select committee’s report highlights three areas of concern regarding the structure and operation of the Landfill tax. They are:

  • The tax level was set too low to facilitate changes to waste disposal. The reports says that “the Government should decide whether the main aim is to make sure the polluter pays (in which case it will raise money but will not necessarily change behaviour) or to change behaviour (in which case a higher rate of tax may be required).
  • The tax has had some negative impacts. These include an increase in fly-tipping. The report sees these impacts as largely unavoidable, but suggests that “when establishing future taxes, it will be necessary to provide funds to mitigate such consequences”.
  • The tax’s associated credit scheme, that releases 20% of the money generated for use on environmental projects, is too complicated. The complexity of the credit scheme has led to difficulty in monitoring the environmental quality of projects receiving funds.

The Landfill Tax is currently set at £10 per tonne. Gordon Brown’s 1999 Budget included a measure to increase the tax’s rate by £1 per tonne each year, until 2004. In 1997-1998, the Landfill Tax raised £361 million.

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