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Aggregates tax is legal, say European judges

MATERIALS - Defeat for British Aggregates Association case against UK Government over levy

QUARRY operators campaigning against the Government's tax on aggregate have been dealt a hammer blow by judges in a European court.

They ruled that the UK government had not broken the European Commission's state aid rules when it introduced the tax.

An action brought by the British Aggregates Association claimed that the Government was in breach of these rules when it introduced a tax exemption for quarriers in Northern Ireland, in May, 2004.

This distorted competition and put its members at a competitive disadvantage, according to the BAA .

It had hoped that judges at the Court of First Instance would agree with its view and issue a ruling that would, in effect, outlaw the aggregates levy.

But a board of five judges at the court decided that there had been no infringement and so the tax will stay.

In a 23-page document the judges rejected the BAA's claims that the levy was a direct tax paid by the producer rather than an indirect tax paid by the purchaser.

The judgement read: 'It is clear that the aggregates levy, which, contrary to what the applicant maintains, applies to the commercial exploitation of aggregates and is thus charged against products and not on the income of producers, does indeed constitute an indirect tax.'

It also rejected claims that the EC had exceeded its powers by deciding that it did not need to intervene when the Government decided to exempt exported aggregates from the levy.

The judges also rejected BAA claims that the EC failed to 'conduct a diligent and impartial examination of the applicant's complaint.'

They said: 'The mere fact that the contested decision was adopted rapidly does not mean that there was a failure to undertake a sufficiently thorough analysis.'

BAA director Robert Durward said of the decision: 'It is extremely disappointing to say the least.

'Effectively, what the courts have said is that they are ditching existing case law and are increasing the scope for Government to levy taxes.

'Basically the goal posts have been shifted.'