Landfill tax rise of 700% sparks surge in fly-tipping as watchdog urges officials to monitor impact of environmental levies
- Treasury increased standard rate of landfill tax in real terms from 1998 to 2014
- Contributed to 65 per cent fall in waste to landfill, National Audit Office said
- The NAO said that the move ‘incentivised more illegal disposal of waste’
A huge rise in landfill tax has led to a surge in fly-tipping and helped cost the Treasury £275million a year in lost income, it was revealed yesterday.
The Treasury increased the standard rate of landfill tax by 700 per cent in real terms between 1998 and 2014, said spending watchdog the National Audit Office. That contributed to a 65 per cent fall in waste going to landfill.
The NAO said the move ‘incentivised more illegal disposal of waste’ as people desperate to avoid the tax dumped rubbish at locations around the country where local councils had to pay to clear it up.
A rise in landfill tax has led to a surge in fly-tipping, according to the National Audit Office. (Stock image)
It said fly-tipping and misclassified waste at authorised sites resulted in a loss of £275million in taxes.
The report also highlighted that too little is known about the effect of environmental taxes and urged Whitehall departments to monitor their impact.
It found that the Treasury and HM Revenue and Customs (HMRC) ‘do not centrally oversee’ how the tax system impacts on the Government’s environmental targets.
In its report on environmental tax measures, the watchdog said HMRC had only formally evaluated the impact of the landfill tax, which found it had been a driver for the fall in demand for landfill.
The NAO said HMRC instead uses environmental data collected by third parties, as well as feedback from stakeholders and tax receipts to assess the impacts of such taxes and advise ministers.
‘This information can provide some indication of environmental impact, but it will rarely be sufficient to determine how far an environmental tax has changed behaviour,’ the NAO said.
Labour’s Meg Hillier, chairman of the Commons Public Accounts Committee, said: ‘Those holding the purse strings in Government have a crucial role to play in tackling the climate crisis.
The Treasury increased the standard rate of landfill tax by 700 per cent in real terms between 1998 and 2014. (Stock image)
‘The fact that neither Treasury nor HMRC can say what impact environmental taxes are having on the environment speaks volumes.
‘Even more worrying is the possibility that these taxes are incentivising harmful behaviour – landfill tax has resulted in more illegal dumping of waste.
‘Government must start effectively pulling all of its available levers if it’s to have any hope of achieving its environmental goals.’
The report said there are ‘some good examples where planned new taxes and changes to existing tax measures were considered in environmental strategies developed by Defra and BEIS’.
‘But the different routes for announcing tax, regulation and spending decisions make government-wide approaches challenging to develop, and there is a need for coherence across the tax system as a whole,’ it said.
‘The strategies for clean air and clean growth did not consider all the existing taxes we would expect.
‘While the exchequer departments work with the departments who lead on environmental strategies, they do not plot the role of the tax system in helping government achieve each of its environmental objectives or set out the interaction between the tax system and other policy tools.’
The report concluded that the ‘scale of government’s environmental ambitions, particularly on net zero, means government needs to consider every tool at its disposal if it is to succeed’.