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If you want to keep your tax bill down - recycle!

23rd April 2007

"It is broadly accepted that there are two things that encourage recycling, or at least diversion from landfill; the fear of enforcement legislation and cost ," says Mick Fishwick, Chief Executive of The TEG Group Plc. 

Enforcement legislation has certainly been proven to play its part. Recycling rates in the used tyre sector rose remarkably in the earlier part of this decade as the landfill ban took effect, prompting the development of a whole range of new technologies and applications.  It was a case study in how quickly a sector can respond if it really has to and really wants to.  

"Applying such blanket bans to most of our landfilled waste is not realistic of course and so the enforcement drivers have had to be supported by financial drivers.  Waste producers run businesses or have public budgets to manage and cost is more often than not the primary consideration when looking at disposal options.  If it benefits the environment as well, all the better, but many recyclers have learned to their cost that "nice to have" does not build recycling businesses.  How many environmental technologies have withered on the design vine because they could not achieve financially sustainability?  

"Developing, for example, in-vessel composting systems to meet the stringent demands of organisations such as the Environment Agency, Defra and the State Veterinary Service takes years of research and product development.  While companies such as TEG have been able to access funds, not many companies have been able to do so when financiers knew that landfill was cheap and readily available.  But all that finally seems set to change.

"Landfill Tax (LFT) has of course been the real driver in increasing the cost of landfill.  Steady increases, rising from £1 per tonne per annum to £3 per tonne per annum have gradually made landfill unattractive.  For many recycling sectors and composting in particular, 2005 and 2006 became landmark years as the cost of landfill reached the cross over point and recycling became truly competitive.  What was no more than "nice to have" two or three years ago to, say, a food producer, is suddenly helping the bottom line.  Landfill now offers guaranteed price hikes year on year while the shrewd recycler can offer a customer visibility and stability, and composting capacity is being taken up rapidly.

"The increase in the rate of LFT rises to £8 per tonne per annum was a surprise to many in the sector but could we composters, recyclers and technology developers have asked for a stronger message of support?  Recycle soon or literally pay for the consequence of not doing.  Landfill as a benchmark for recycling gate fees has now changed from being a mill stone to a fabulous sales tool.  And what about the prospect for other economic drivers in the sector?  Some have questioned the Government's commitment to enforce LATS fines not many will now gamble on that against a backdrop of a Chancellor who has forced through such a hike in landfill tax.

"Now business plans for new technologies will look very attractive indeed.  A whole host of technologies are ready for development and the funding will now surely flow to make it happen.  As a waste producer, there is only one way to avoid the tax bill, Government actually wants you to do it and woes betide those that fail to understand the message; if you want to keep your tax bill down - recycle!"

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