Tax on dumps promises jobs for thousands

A cleaner way with rubbish: `Eco' levy on landfill sites that starts tomorrow will spark many recycling schemes, but at a price

Tomorrow sees the dawn of a revolutionary "eco" tax which will make polluting more expensive and create jobs. Yet, like any new tax, its introduction is surrounded by much moaning.

The pessimistic view of the Government's landfill tax - a levy on each ton of rubbish taken to a dump - is that it will lead to a surge of fly- tipping on roadsides, car parks and open spaces.

Furthermore, council-tax bills will rise or local government services be cut because the tax will be passed on to councils, which are among the biggest dumpers of all. In Ireland, rubbish will start to flow from Ulster to the Republic, where the tax does not apply.

But the optimists see the tax as a significant step towards an ecologically sustainable society. It will cause hundreds of new, labour-intensive recycling schemes to blossom, creating thousands of jobs. Some further jobs, though perhaps not many, will come from a small cut in National Insurance employer contributions which the tax is being used to fund.

This is the first application of a new taxation principle announced by the Chancellor, Kenneth Clarke, in his 1994 Budget. John Gummer, Secretary of State for the Environment, persuaded him to move towards more taxation of activities which do environmental harm (many of which are completely untaxed) and to reduce taxes on labour and employment correspondingly.

Landfill sites are environmentally destructive because rotting refuse produces methane, a global-warming gas, and a noxious liquid called leachate. If it leaks out - which should not happen in modern, sealed landfill sites - it can pollute aquifers and surface streams.

From tomorrow each tonne of waste will be taxed pounds 7, which drops to pounds 2 a tonne for inert, non-rottable waste such as demolition rubble and ash. The tax will fall on the operators of landfill tips, who currently charge companies and local councils pounds 5-pounds 25 for each tonne of refuse received. The operators will pass the tax on to their customers.

It will bring in about pounds 500m a year, and Mr Clarke has already pledged to use this to fund a 0.2 per cent cut in National Insurance employee contributions, taking them down to 10 per cent. HM Customs and Excise, which will collect the tax, estimates it will apply to around 1,700 landfill sites. ``We're not rash enough to claim that we have identified them all,'' a spokesman said. But Customs is fairly confident that the new tax will run smoothly because the sites already require a government licence and the amount entering has to be monitored to collect VAT.

The Government's Environment Agency has sent a circular to all magistrates courts pleading for harsh fines on waste-disposers who avoid the tax by fly-tipping on public land.

There is a creative twist in the new tax. Landfill site operators will be able to claim back 90 per cent of each pound of tax they pay in return for each pound they spend on approved "green schemes".

Those schemes will cover research and development into recycling and waste reduction, public education and the beautifying and greening of land blighted by disposal operations. They will have to be run by specially created, non-profit-making partnerships which can include tip operators, councils and environmental charities.

The new organisations will be controlled by a regulatory body which has not yet been set up. It is hoped that within a few years they will be spending tens of millions of pounds per annum, employing thousands of people in a range of schemes, many involving recycling.

The new tax will also promote the building of huge municipal incinerators which use the heat generated to produce electricity. Waste disposed in them is exempted from the landfill tax, so its advent makes them much more competitive with landfill sites.

It remains to be seen whether the tax, set at a modestly low level, will give the millions of households and companies who produce the waste an incentive to produce less. The latest figures show that in the South- East, the most affluent part of Britain, municipal refuse is rising by 3 per cent a year.

Mr Gummer hopes to persuade the Government to adopt other kinds of environmental tax linked to rebates for setting up trusts that run environmental improvement projects. ``The trust concept seems to be the route down which we should go,'' he told The Independent.

But he has scrapped plans for an eco-tax on the quarrying industry, which lobbied successfully against it.