We have previously posted about the Aggregates Levy, most recently that Aggregate producers persuade HM Treasury to review Aggregates Levy.
The government has now launched the review, and has published a discussion paper:
The Aggregates Levy ‘the levy’ is an environmental tax that was introduced in 2002 to reduce the extraction of fresh aggregate (rock, sand and gravel used as bulk fill in construction) and encourage recycling and use of by-products from other industrial processes. It has not been reviewed since its introduction, but following the conclusion of litigation on the legality of the levy in February this year, the government announced a comprehensive review of the levy, and confirmed its commitment to devolving the levy to the Scottish Parliament.
The government will consider all aspects of the Aggregates Levy, considering new and existing evidence on the impact of the levy (including its environmental impact), and the nature of the wider industry.
When considering possible changes to the Aggregates Levy, the government will bear in mind:
* the policy objectives in the light of the latest evidence on the environmental impacts of aggregates extraction, considering also the environmental impacts of other methods of aggregate production and of the extraction of other construction materials
The levy has historically brought in between £240 and £410 million of annual revenue.
What were the objectives of the levy? According to the discussion paper:
The levy was designed with various exemptions to encourage the use of less environmentally damaging sources of aggregate. The extraction of fresh aggregate can cause noise, dust, visual intrusion, loss of amenity and damage to biodiversity. When it was introduced, the objectives of the levy were described as being: to address, by taxation, the environmental costs associated with quarrying operations in line with the government’s statement of intent on environmental taxation at the time; to cut demand for virgin aggregates; and encourage the use of alternative materials where possible.
One of those exemptions was for secondary aggregates derived from china clay and ball clay waste. Hundreds of millions of tonnes of such material scar the Devon and Cornwall landscape.
The Mineral Products Association will have something to say about the Aggregates Levy; according to MPA CEO Nigel Jackson:
"A lot has changed since the Aggregates Levy came in," says Jackson, "the most obvious being the virtually maxed-out nature of recycling. Although we never accepted the link between the levy and recycling, it was more about the landfill tax. That was the real driver. Whatever the absolute causal link, recycling and use of secondary aggregates has increased dramatically from where we were in the late 1990s."
"Overall, the industry has moved forward enormously since then in its CSR [corporate social responsibility], sustainability and general environmental performance. Given that our members pay over 90% of the levy, we will be very actively involved in its review."
Jackson stresses that the mineral products industry is already paying its full whack on environmental taxes. "My challenge to government is, 'Tell me an industry that does not have environmental impacts where the externalities have not been internalised?' We are taxed on extraction, anything we put into a landfill, and we are taxed on our CO₂ output. We are at least triple taxed, but because carbon tax is complexed, we are probably quadruply taxed. We’ve also got the Apprenticeship Levy. You tell me another industry paying that many taxes?"
