The levy is one of several green tax recommendations made in a report issued by the ESA ahead of next weeks Autumn Statement by the Chancellor in the House of Commons.
Imposing a levy on peat could save around 300,000 tonnes of CO2 emissions per annum, the association estimates. And, it says the tax base would be easily identifiable and administrative costs of the levy could be integrated with retailers VAT collection and reporting systems to minimise the burden on businesses.
ESA claims that a levy on peat would help stimulate compost markets as it would encourage consumers to use recycled compost in place of products derived from virgin material. According to RSPB research quoted in the report, a levy of 4p per litre on retail bags of peat-based growing media would incentivise a move towards recycled organic material.
Deficit
ESA director of policy Matthew Farrow, said: Next week the chancellor has the difficult task of showing how he will reduce the deficit while also helping businesses to grow. Many of us would also like to see him do this in a green way. In our new report we show how some new thinking around the role of taxes and fiscal incentives in the waste and resources field could allow our industry to make a bigger contribution to the Chancellors challenges.
First though, the government must recognise its over-reliance on landfill tax both in policy and revenue terms. We believe landfill tax revenues may fall quickly in the coming years, making deficit reduction harder. At the same time, the environmental benefits of the tax will diminish as the focus moves further up the waste hierarchy. And the lack of clarity over the future of the tax post-2014 has created business uncertainty.
Escalator
The report sets out a number of alternative measures to raising the landfill tax escalator beyond 2014, which ESA claims could raise costs for producers and will not bring about significant environmental benefits.
Measures include a packaging levy alongside the PRN system to incentivise the reduction, recycling and recovery of packaging, enhanced capital allowances for investment in material sorting technologies, infrastructure investment allowances for investment in new waste recovery infrastructure, as well as a lower rate for Carbon Reduction Commitment allowances for recycling activities. ESA estimates that these measures could benefit the UK economy by up to 2 billion per year.
Mr Farrow added: In our report we show how the easy option of extending the landfill tax escalator beyond 2014 is the wrong option. Instead, we need some new thinking about how to promote investment further up the waste hierarchy. We propose a package of fiscal incentives and new taxes to do this.
The landfill tax was right for its time, and has been a great success. But I hope our report will start a debate over how we can go beyond the landfill, tax and develop a green tax system that can help our sector meet the new challenges of making the waste hierarchy a reality.
The ESA report is available as a PDF at: Beyond Landfill
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