Labour has labelled a controversial landfill tax change a “scandalous tax hike on small businesses” and warned ministers it risks destroying jobs and economic growth.
Shadow waste minister Gavin Shuker accused ministers of attempting to “change the rules when they thought no-one was watching”.
Shuker told Construction News’ sister title MRW: “At a time when small businesses are struggling, it’s typical of this out-of-touch government to change the rules when they thought no-one was looking.
“The landfill tax is critical to achieving a zero-waste economy, but springing this scandalous tax-hike on companies will destroy jobs and further damage growth.”
Mr Shuker’s comments follow skip operators threatening to block the streets of London over the Jubilee weekend after the government announced tax clarifications that have seen the tax cost of disposing of certain materials increase by a staggering 2,460 per cent overnight.
Skip operators and smaller waste firms that deal with construction and demolition and commercial waste say the move threatens to kill off a raft of small and medium size disposal outfits.
MRW’s reporting of the dispute has been picked up by national media, including a reference in The Sun newspaper.
Labour MP, Siobhain McDonagh, is attempting to broker a deal between the government and skip hire firms after constituents raised concerns to her about the changes.
She has invited a raft of senior government figures including prime minister David Cameron to emergency talks on Thursday 31 May in an attempt to thrash out a deal over the controversial landfill tax hikes.
In a letter to skip operators, Ms McDonagh said: “We will be inviting the prime minister, the chancellor of the Exchequer, the Exchequer secretary [a Treasury minister], and their representatives.
“Also invited will be Labour spokespeople Chuka Umunna [shadow business secretary], Ed Balls [shadow chancellor], and Rachel Reeves [shadow secretary to the Treasury].”
Meanwhile, the Plant, Waste and Recycling Show’s petition “Say no to increased landfill tax and rising fuel costs” has already attracted nearly 1,500 signatures.
The change that’s rocked the industry
So-called “inert” fines from trommels and screens (material that is not going to contaminate landfill and does not count towards the EU biodegradable landfill targets) was charged at the lower landfill tax rate of £2.50.
But now merchants will have to pay the same full rate of £64-a-tonne to landfill which is paid for “active” material, including non-inert fines that can be biodegrade and create methane.
In addition, waste or material used to cover waste in landfill areas before they are capped will also be taxed at the full rate. This had previously been regarded as “engineering material”, such as bund walls and caps.
The move, outlined in a HMRC briefing document published on 18 May, relates to a judgement in the HMRC v Waste Recycling Group (2008) case.
HMRC & Defra respond
An HMRC spokeswoman said: “HMRC responded to concerns expressed by landfill operators that some companies were not paying the right rate of tax and in the process disadvantaging those who paid the correct rate.
“We have addressed this anomaly by issuing fresh guidance to ensure a level playing field for all businesses working in landfill.”
A Defra spokesperson said:“Landfill tax is a matter for the Treasury and HM Revenue & Customs.
“The new guidance from HM Revenue & Customs should not affect firms that can demonstrate that they are processing naturally occurring rock, sub-soil or stones and will encourage the waste industry to ensure they are accurately describing the contents of any load they are sending to landfill.”