Taxing your Understanding
Climate change, green taxes, zero carbon standards, carbon footprints, land fill tax. All words we are familiar with in this day and age. But how many people really know how landfill tax works?
The Chancellor again referred to this rather specialised tax in the 2008 Budget, announcing that the standard rate of landfill tax will increase by £8 per tonne to £40 per tonne in 2009/10. But this is a form of taxation which only a few people need to know about.
It is now nearly 12 years since it was introduced, applying to all waste disposed on or after 1 October 1996 by way of landfill at licensed landfill sites. It is charged by weight and there are two rates of tax: £2 per tonne for inactive or inert waste and standard rate for all other taxable waste. Back in 1996, the standard rate was £7 per tonne, rising steadily to £15 per tonne in 2004. Since then it has risen by £3 per year and for 2007/08 it is currently £24 per tonne. In 2008/09 the standard rate will be £32 per tonne and the inert waste rate £2.50.
However, tax credits (another buzz word favoured by the current government) are available to reduce the amount of tax payable.
The Landfill Tax Credit Scheme encourages landfill site operators to fund local community environmental projects. In simple terms, 90% of a donation to an enrolled environmental body for spending on an approved object, can be claimed against the landfill tax liability, subject to a maximum of 20% of the total tax payable in a 12 month period. (For example, if total landfill tax for a 12 month period is £100,000, the maximum tax credits claimable are £20,000 which would allow donations of £22,222, 90% of which is £20,000.)Approved objects include public parks, architecturally interesting or religious buildings, and conservation projects all in the vicinity of the landfill site.
As well as hiking up the rate of landfill tax, the government has imposed on each waste disposal authority an allowance for the amount of bio-degradable waste it may dispose of to landfill for the years 2005 to 2020. Any authority that goes over its allowance faces a penalty of £150 per tonne on top of the cost of disposing of the waste. The UK is now required under the EU Landfill Directive to reduce to 35% the amount of biodegradable municipal waste going to landfill sites by 2020, and 50% by only 2013. At present, we recycle only 37% of our waste compared to 50-60% across much of mainland Europe.
This all sounds rather gloomy but there is light on the horizon. Riding to the rescue is a set of new technologies that could dig everyone out of their landfill hole. The technologies already exist to gasify the waste and turn it into heat and power and the next few years will see a whole host of new technology companies competing to make the technology economically viable, Countrystyle being a trend setter!