Aggregates Tax (UK)

Introduced

2002

Aims

The aim of the tax is to reduce demand for virgin aggregates, and encourage the use of recycled materials and address the environmental costs associated with quarrying e.g. noise, dust, visual intrusion.

Design

Scope

The aggregates levy applies to any sand, gravel or crushed rock extracted in the UK or its territorial waters, or imported into the UK. The aggregate will become liable to the levy when it is commercially exploited.

Coverage

Activities Covered by the Aggregates Tax:

· Physical removal from the site where it was extracted (except when it is moved to another site which is registered in the same name as the originating site)

· Sale to another person

· Use for construction purposes

· Mixing with anything which is not a chargeable aggregate or water.

Tax Rates

The standard rate of tax (pounds per tonne) is £1.60 (€2.37). This is still the rate in 2006 (HM Customs and Excise (http://customs.hnrc.gov.uk ).

Exemptions

The levy will not apply to other quarried or mined products, such as: ·

· coal

· clay

· shale and slate

· metals and metal ores

· gemstones or semi-precious stones

· industrial minerals

Blocks of stone ("dimension stone"), used for paving, facing or repairing buildings, etc. will be outside the scope of the levy. Limestone used for the production of lime or cement will be exempt from the levy. Following further consultation on the draft legislation, any mineral used in prescribed industrial or agricultural processes (such as glass making or fertiliser manufacture) will also be exempt.

Exemptions also apply to:

· any aggregate necessarily arising from the dredging of marine navigation channels and inland waterways,

· road construction and building construction ·

· the spoil or waste from, or other by-products of, any industrial combustion process or the smelting or refining of metals ·

· offshore drill cuttings ·

· excavation of highways for utility work.

Exports of aggregate will be relieved, while imports of aggregate will be taxed on their first sale or use in the UK. There is provision for relief from aggregates levy on sales that customers have not paid for (bad debt relief). In these circumstances the aggregates levy will have to be shown separately on the sales invoice or on a separate aggregates levy invoice. Northern Ireland firms have an 80% discount on the levy and the European Commission has approved this until 2011. This was thought necessary due to "very difficult" market conditions faced by Northern Irish quarries competing with those in the Irish Republic (ENDS, 2004). According to EU environmental aid guidelines, payment of 20% of the normally applicable rate constitutes a "significant" proportion of national tax, and is therefore admissible.

Allocation of Revenues

Revenues raised from the aggregates levy are recycled back to business through a 0.1 percentage point cut in employers' National Insurance Contributions and a new Sustainability Fund called the Community Environmental Renewal Grants.

This is also administered by Forward Scotland on behalf of the Scottish Executive using funds provided by the Executive from the Aggregates Levy. £1.35 million (€2million) was distributed by the end of March 2004. Scottish communities in areas affected by past or present quarrying operations can now apply for grants from this fund of between £5,000 and £50,000 for projects that will improve the quality of their environment. The scheme supports a wide range of community based projects that address the environmental effects of aggregate extraction such as visual impacts, noise, dust, transport and loss of habitat. To be eligible, the community must be within five miles of a working quarry or two miles of a disused one or be able to show that they suffer directly from the extraction of rock, gravel or sand. Successful applications have to demonstrate that the community is involved and that there will be local, social or economic benefits arising from the work. Possible projects might include:

· providing or upgrading footpaths or nature trails;

· studies into ways to reduce the impact of heavy transport;

· regenerating disused quarries for the benefit of the local economy;

· finding long term solutions to problems of pollution or fly tipping;

· or improving the landscape for recreation or nature.

Four priority themes have been identified: landscape and community recreation; habitat restoration and local biodiversity; restoration and protection of historic environment; pollution mitigation.

Performance

According to the European Environment Agency (2008), it is difficult to evaluate the effectiveness of environmental taxesand charges on sand, gravel and rock mining. The

Agency's analysis of green taxes on building materials in the Czech Republic, Italy, Sweden and the UK reveals diverse government goals from preserving the landscape to encouraging recycling, but little or no data to show these goals are being met. The

EEA calls for additional monitoring systems to evaluate environmental impact.

References

ENDS, 2004, Environmental Daily, Issue 1665, Tuesday 11 May 2004.

Eurepean Environment Agency, 2008. http://reports.eea.europa.eu/eea_report_2008_2/en/Effectiveness_of_environmental_taxes_final_low.pdf.

Useful websites:

http://www.sepa.org.uk/wastemin/legis/aggregates.htm

Written by admin

Introduced

2002

Aims

The aim of the tax is to reduce demand for virgin aggregates, and encourage the use of recycled materials and address the environmental costs associated with quarrying e.g. noise, dust, visual intrusion.

Design

Scope

The aggregates levy applies to any sand, gravel or crushed rock extracted in the UK or its territorial waters, or imported into the UK. The aggregate will become liable to the levy when it is commercially exploited.

Coverage

Activities Covered by the Aggregates Tax:

· Physical removal from the site where it was extracted (except when it is moved to another site which is registered in the same name as the originating site)

· Sale to another person

· Use for construction purposes

· Mixing with anything which is not a chargeable aggregate or water.

Tax Rates

The standard rate of tax (pounds per tonne) is £1.60 (€2.37). This is still the rate in 2006 (HM Customs and Excise (http://customs.hnrc.gov.uk ).

Exemptions

The levy will not apply to other quarried or mined products, such as: ·

· coal

· clay

· shale and slate

· metals and metal ores

· gemstones or semi-precious stones

· industrial minerals

Blocks of stone ("dimension stone"), used for paving, facing or repairing buildings, etc. will be outside the scope of the levy. Limestone used for the production of lime or cement will be exempt from the levy. Following further consultation on the draft legislation, any mineral used in prescribed industrial or agricultural processes (such as glass making or fertiliser manufacture) will also be exempt.

Exemptions also apply to:

· any aggregate necessarily arising from the dredging of marine navigation channels and inland waterways,

· road construction and building construction ·

· the spoil or waste from, or other by-products of, any industrial combustion process or the smelting or refining of metals ·

· offshore drill cuttings ·

· excavation of highways for utility work.

Exports of aggregate will be relieved, while imports of aggregate will be taxed on their first sale or use in the UK. There is provision for relief from aggregates levy on sales that customers have not paid for (bad debt relief). In these circumstances the aggregates levy will have to be shown separately on the sales invoice or on a separate aggregates levy invoice. Northern Ireland firms have an 80% discount on the levy and the European Commission has approved this until 2011. This was thought necessary due to "very difficult" market conditions faced by Northern Irish quarries competing with those in the Irish Republic (ENDS, 2004). According to EU environmental aid guidelines, payment of 20% of the normally applicable rate constitutes a "significant" proportion of national tax, and is therefore admissible.

Allocation of Revenues

Revenues raised from the aggregates levy are recycled back to business through a 0.1 percentage point cut in employers' National Insurance Contributions and a new Sustainability Fund called the Community Environmental Renewal Grants.

This is also administered by Forward Scotland on behalf of the Scottish Executive using funds provided by the Executive from the Aggregates Levy. £1.35 million (€2million) was distributed by the end of March 2004. Scottish communities in areas affected by past or present quarrying operations can now apply for grants from this fund of between £5,000 and £50,000 for projects that will improve the quality of their environment. The scheme supports a wide range of community based projects that address the environmental effects of aggregate extraction such as visual impacts, noise, dust, transport and loss of habitat. To be eligible, the community must be within five miles of a working quarry or two miles of a disused one or be able to show that they suffer directly from the extraction of rock, gravel or sand. Successful applications have to demonstrate that the community is involved and that there will be local, social or economic benefits arising from the work. Possible projects might include:

· providing or upgrading footpaths or nature trails;

· studies into ways to reduce the impact of heavy transport;

· regenerating disused quarries for the benefit of the local economy;

· finding long term solutions to problems of pollution or fly tipping;

· or improving the landscape for recreation or nature.

Four priority themes have been identified: landscape and community recreation; habitat restoration and local biodiversity; restoration and protection of historic environment; pollution mitigation.

Performance

According to the European Environment Agency (2008), it is difficult to evaluate the effectiveness of environmental taxesand charges on sand, gravel and rock mining. The

Agency's analysis of green taxes on building materials in the Czech Republic, Italy, Sweden and the UK reveals diverse government goals from preserving the landscape to encouraging recycling, but little or no data to show these goals are being met. The

EEA calls for additional monitoring systems to evaluate environmental impact.

References

ENDS, 2004, Environmental Daily, Issue 1665, Tuesday 11 May 2004.

Eurepean Environment Agency, 2008. http://reports.eea.europa.eu/eea_report_2008_2/en/Effectiveness_of_environmental_taxes_final_low.pdf.

Useful websites:

http://www.sepa.org.uk/wastemin/legis/aggregates.htm