QPA Budget Freeze on Aggregates Levy shoud be First Step in
Proper Levy Assessment
Commenting on the Budget Simon van der Byl, QPA Director General
said: ‘We are relieved that the Aggregates Levy has been
frozen, but given that the evidence supplied by the QPA illustrates
the environmental inefficiency of the Levy, and the Levy u-turn
in Northern Ireland, there is no case for any increase.
As a matter of urgency, the Treasury must now carry out an open
and transparent assessment of the Levy in order to clarify its
objectives, and its environmental performance, to inform future
policy development.’
Although this was a fairly quiet budget, another issue of concern
to industry was the 57% increase announced for duty on gas oil/red
diesel. This fuel is widely used by the quarrying and construction
industries and will inevitably contribute to rising construction
costs.
ENDS
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The Quarry Products Association is the principal trade association
representing the UK aggregates industry. In England our members
produce over 90% of aggregates extracted - sand and gravel
and crushed rock as well as other non aggregate minerals such
as silica sand, agricultural and industrial lime including
limestone, chalk, clay and shale for cement.
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The Aggregates Levy was announced
in the March 2002 Budget, legislation was included in the
2001 Finance Act, and the Levy of £1.60 per tonne implemented
in April 2002. The Levy is planned to generate £385
million per annum, although actual revenue is probably around
£350 million per annum. In order to support environmental
initiatives and improvements for local communities in quarrying
areas, and also to finance recycling initiatives, DEFRA was
given £29.3 million in both 2002/3 and 2003/4 to finance
the Aggregates Levy Sustainability Fund in England. ALSF funding
for local community and environmental improvements is channeled
through three national organizations, English Nature, The
Countryside Agency and English Heritage and through direct
funding allocations to three counties with significant quarrying
activity (Derbyshire, Leicestershire and Somerset County Council).
These organizations now face substantial cuts in their ALSF
allocations next year.
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Prior to Government’s original
decision to introduce the Aggregates Levy, the QPA had proposed
as extensive package of voluntary and regulatory environmental
proposals as a more environmentally effective alternative
to the proposed Levy. The QPA proposals were rejected by Government
in favour of the Levy. In its decision to significantly reduce
the rate of Levy in Northern Ireland in return for an environmental
agreement with the industry Government has in effect acknowledged
that the original Levy decision was wrong.
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The QPA report reaches the following
conclusions:
a. The introduction of the levy as a new environmental tax
was accompanied by no detailed environmental objectives, targets,
benchmarks nor measurement criteria, other than very general
policy aims, an issue which clouds any levy assessment.
b. The levy has failed the Government’s own Tests of
Good Environmental Taxation. Most critically, these tests
state that:
“Economic instruments must deliver
real environmental gains cost-effectively” and
“Environmental policies must
not threaten the competitiveness of UK business.”
In practice, it is highly questionable
if the levy has delivered net environmental gains (this assessment
suggests not), it has demonstrably not been cost-effective,
it has already damaged the competitiveness of UK business
and threatens to inflict further damage. The levy is a bad
environmental tax.
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