LAWR

April 2015 Local Authority Waste & Recycling 25 LANDFILL MANAGEMENT England, with the former the sole driver for the diversion of commercial and industrial wastes from landfill. How effective has landfill tax been in diverting waste from landfill? That depends on the differential between the cost of landfilling (with tax) relative to the gate fees charged for alternative treatment options. At its present level (£80 per tonne this month [April 2015] followed by an annual retail price index [RPI]-related rise thereafter) the latest WRAP gate fee report for 2013/14 shows median landfill gate fees exceeding those for other options, but with overlapping ranges. This suggests that, on average, landfill tax at £80 per tonne has achieved the objective of making landfill the most costly waste management option, but that local/regional positive and negative differentials exist between options. Whether this price differential " Policymakers will most likely still rely on the 'soft power' of landfill tax to do the heavy lifting of landfill diversion. " The case for raising the standard rate of landfill tax beyond £80 per tonne is by no means clear cut, according to Eduljee. Gev Eduljee is external affairs director at SUEZ Environnement. LOSS OF IGNITION TEST DEFINITION HMRC state that its Loss of Ignition test will assist landfill site operators in assessing landfill tax liability in cases where there "was uncertainty and would be used on a mandatory basis to test a random selection of samples to assure that the lower rate was being applied accurately and consistently". encourages waste to move between options (including landfill) on a spot basis requires a deeper analysis. 'Alternative option costs' The case for raising the standard rate of landfill tax beyond £80 per tonne is by no means clear cut. Landfill tax can only be set in relation to the 'average' cost of other options. Furthermore, too high a tax can induce inflationary tendencies. To stretch a point, if landfill (with tax) costs £150, but an alternative option costs £75, then the former effectively sets a ceiling price to which other options can rise while still remaining competitive relative to landfill. As the relative costs for alternative options come down, so the differential between landfill and other options will in any event tend to widen. On balance, keeping the standard rate at £80 with an annual RPI increase seems about right (but see below). Of greater concern is the differential between the lower and standard rates of landfill tax. At current and projected escalations in the standard rate, the UK will arguably have one of the highest differential landfill tax rates of the twenty EU Member States that apply the tax. Applying the lower tax rate to material that should attract £80 per tonne tax allows rogue operators to offer a far reduced tax-inclusive gate fee, retaining significantly increased margins while depriving legitimate landfill operators of business. 'Skip blockade' While HMRC's Loss on Ignition test (see box) will help safeguard the integrity of the lower rate, the most sensible option – increasing the lower rate to reduce the differential – is unlikely to gain traction politically, particularly with the skip blockade on Parliament still fresh in many memories. Looking ahead, the European Commission's circular economy package COM (2014) 398 final has suggested a 70% recycling target by 2030 (which de facto restricts landfilling further) supported by progressive landfill bans culminating in a goal to "virtually eliminate" landfill by 2030. Even if these targets were to be watered down when the package is reviewed in 2015/16, the role of landfill as a frontline waste management option will continue to diminish over the next 15 years. Viewed in that context, the mix of fiscal instruments and targets adopted in Scotland and Wales could be regarded as prescient, providing waste managers with a degree of long-term certainty that is missing in England. Here, unless EU policy says otherwise, policymakers will most likely still rely on the 'soft power' of landfill tax to do the heavy lifting of landfill diversion. Having just one string to their bow to influence change severely restricts Defra's wriggle-room. Hiking the rate of the tax, as the only way to accelerate change, risks the market distortions discussed above, and higher costs across the board. The challenge for our sector is to avoid a strategic asset becoming a stranded asset over the next decade or so, as landfill diminishes. Careful management of landfill void space requires a wider palette of policies and clear targets, so that waste managers can anticipate and plan for future needs with greater certainty.

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