A new levy to tackle the environmental costs of quarrying and encourage the use of recycled materials was announced by the Chancellor today.
All of the revenues will be returned to business through a cut in employer NICs and a new Sustainability Fund to deliver environmental benefits to the local communities affected by quarrying. There will be no net gain to the Exchequer from this reform.
The Government will be consulting on how the new Sustainability Fund can best be used to deliver local environmental benefits.
NOTES TO EDITORS
1. DETR commissioned research has shown that there are significant local environmental costs associated with the extraction and transport of aggregates, including noise, dust, vibration, loss of biodiversity and amenity and visual intrusion. But it is not just local communities who suffer. There is also evidence of wider public concern over the environmental impact of quarrying in protected areas such as national parks. The research found that the average environmental cost associated with the extraction and transport of aggregates was around UK Pounds 1.80 per tonne.
2. The Government is taking a cautious approach by introducing the levy at a lower rate than that justified by the research and by giving firms two years to plan for its introduction.
3. The levy will apply at a rate of UK Pounds 1.60 per tonne to sand, gravel and crushed rock extracted in the UK or its territorial waters. To protect international competitiveness, the tax will be levied on imports but exports will be exempt. Recycled aggregates will also not be subject to the levy. The levy will raise around UK Pounds 380 million per year. The levy will be administered by Customs and Excise and will take effect from 1 April 2002
4. The levy will not apply to other quarried or mined products, such as:
– clay, shale and slate;
– metals and metal ores;
– gemstones or semi-precious stones; and
– industrial minerals.
5. Blocks of stone (“dimension stone”), used for example for paving, facing or repairing buildings, will be outside the scope of the levy. Limestone used for the production of lime or cement will be exempt from the levy whilst limestone and silica sand used in prescribed industrial or agricultural processes (such as glass making or fertiliser manufacture) will be relieved.
6. In the 1998 Budget, the Chancellor announced that Customs and Excise would consult with the industry on how a potential aggregates levy might work. Customs issued a consultation document on 15 June 1998 inviting views on the design and operation of a levy on aggregates. Around 200 responses were received from all sectors of the aggregates industry and others potentially affected (glass, construction, ceramics etc); environmental groups and local authorities. In April 1999, the draft legislation was exposed to the trade, along with the consultation summary, for further comment. Responses, in the main, sought clarification on points of detail concerning liability issues. No fundamental concerns were expressed about the overall shape of the levy. The November 1999 Pre Budget Report announced that the Government was minded to introduce a tax in Budget 2000.
7. Customs will continue to work very closely with the industry on the detail of the levy and to ensure that any burdens and compliance costs are kept to an absolute minimum. A regulatory impact assessment (RIA) has been made of these measures. It sets out the risks, costs and benefits of the proposals, analyses who will be affected and explains why non-regulatory action would be insufficient. Copies of the RIA are available from:
Environmental Tax Team,
London SW1P 3AG
Other enquiries on the structure of the tax to HM Customs and Excise, Aggregates Tax Team, Ralli Quays, 3 Stanley Street, Salford. M60 9LA. Telephone 0161 827 0906 or 0913.
Any enquiries specifically on the research undertaken into the environmental impact of aggregates extraction to Department of Environment, Transport and Regions, Minerals and Waste Planning Division, 4th Floor, Eland House, Bressenden Place, London SW1E 5DU. Telephone 0171 890 3865
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