A New Landfill Tax For Scotland

25th October 2012

Finance Secretary John Swinney today outlined the Scottish Government plans for a replacement tax relating to the disposal of waste to landfill including proposals for communities in Scotland to benefit more from Landfill tax than elsewhere in the UK.

The passage of the Scotland Act 2012 means that from April 2015 the Scottish Parliament will be empowered to introduce and manage taxes on the disposal of waste to landfill along with the purchase or leasing of land and buildings.

Mr Swinney today outlined Scottish Government plans to make full use of these powers to introduce a replacement landfill tax which would be embedded in Scots law, reflect Scottish values and Scottish circumstances.

One proposal in the consultation will be to establish a replacement for the Landfill Tax Communities Fund, allowing landfill tax operators to contribute 10 per cent more than under current arrangements. Others include looking at the administrative and regulatory model of the fund and the 10 mile radius rule, making sure that those most affected by landfill benefit most.

Launching the Landfill Tax consultation John Swinney said:"I believe that the transfer of responsibility for Landfill Tax alongside the other new tax powers in the Scotland Act (2012) to the Scottish Parliament is a first and significant step towards establishing the principle that taxes paid in Scotland are best managed and set by those with Scotland's interests in mind.

"The Scottish Government wants to take this opportunity to ensure that landfill tax, environmental protection legislation, regulation and compliance regimes are all aligned and working in the best interests of our environment and our economy.

"One opportunity now open to Scotland would be to increase the amount that is invested in the Communities Fund to improve surroundings and mitigate against the impact landfill has on communities.

"We also propose that the Scottish Environment Protection Agency (SEPA) will administer the tax on behalf of Revenue Scotland. This will be an efficient and effective Scottish solution that builds on established competence and experience here. In addition the costs are estimated to be lower than those proposed by Her Majesty's Revenue and Customs (HMRC) for a like for like tax."

Environment Secretary Richard Lochhead said:"Landfill Tax is a cornerstone of Scotland's Zero Waste Plan which encourages the prevention, reuse and recycling of waste and helping keep valuable resources circulating in the Scottish economy."

"Resources and their markets are becoming increasingly volatile. By increasing Scotland's reprocessing capacity we will reduce our dependency on these markets and retain resources within the Scottish economy."

Scotland Act provisions state that the UK Landfill Tax will be 'switched off' in Scotland in April 2015, along with Stamp Duty Land Tax. Provisions in the Act give responsibility for the new Landfill Tax to the Scottish Parliament with a corresponding reduction in the Scottish block grant. This includes responsibility for determining the nature of the tax, any rates, thresholds and exemptions and also responsibility for collecting and enforcing payment of the tax and managing an appeals system.

By ensuring that waste producers incorporate the full cost of waste disposal into business decisions, landfill tax encourages the development of sustainable waste management options, including recycling and anaerobic digestion.

Since 1997, the tax has contributed to a 32 per cent reduction in the proportion of waste sent to landfill and a similar increase in recycling. Across the UK, the tax saves in the region of 0.7 million tonnes of carbon dioxide equivalent emissions a year.

The financial savings that can be made through adopting alternatives to landfill tax are now central to the economics of waste management. Furthermore, the tax has helped establish the stable policy landscape needed to support long-term investment decisions on waste and resources infrastructure and collection systems.

The Landfill Communities Fund was set up in 1996 to provide funding for community or environmental projects in the vicinity of landfill sites. The fund is created through a tax credit scheme whereby landfill operators can give a percentage of the landfill tax (currently 5.6 per cent) to community projects through The Landfill Communities Fund and currently receive a 90 per cent tax credit in return.

Currently there are around 72 landfill sites operated by 54 operators disposing of around 4.56m tonnes of Scotland's waste. The majority of this was mixed wastes and mineral wastes (including construction and demolition waste) which together made up 96% of the total. About 36 per cent of the waste landfilled in Scotland originated from households and the remainder was produced by commerce and industry.