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More detail needed in Landfill Disposals Tax Bill, says National Assembly committee

10/03/2017

​There needs to be more detail in the Landfill Disposals Tax (Wales) Bill, according to a National Assembly for Wales Committee.

In considering the general principles of the Bill, the Finance Committee was disappointed to find that elements, such as the proposed rates of taxation, a list of qualifying materials and provisions for bad debt relief, were not included as provisions on the face of the Bill.

Whilst the Welsh Government intends to bring forward secondary legislation in relation to some of these provisions, the Committee remains concerned that secondary legislation is not subject to the same amount of scrutiny as a Bill.

The Committee also believes that businesses need certainty when it comes to the application of a new tax legislation, and that including such detail in the law itself would help to address concerns.

The Committee has recommended that a Communities Scheme is included on the face of the Bill – the Committee heard a vast amount of evidence regarding the importance of this scheme, and whilst accepting that some of the detail could be specified in regulations, including a provision on the face of the Bill would show a commitment to the scheme going forward.

The Committee’s report raises a number of concerns around the clarity of some of the provisions, this includes materials resulting from mining and quarrying, when a taxable disposal is made and the removal of material from a bed of a river, sea or other water. Further concerns have been raised regarding the time periods given for paying tax on unauthorised disposals in historic cases, which can be up to 20 years old.

Committee Chair, Simon Thomas AM said:

“Whilst not questioning the requirement for this tax legislation, the Committee has raised concerns in a number of areas, including the number of secondary legislation making powers contained within the Bill.  We are concerned that secondary legislation is not subject to the same level of scrutiny as a Bill, leaving us as Members with a stark yes or no choice for making changes.

“The Committee notes the Cabinet Secretary’s call for flexibility and that this is why the Bill contains a number of regulation making powers.  But we refer to the Welsh Government’s own principles of providing ‘stability and reassurance to businesses’.

“It is clear to us that a stable tax system is vital for businesses within Wales and this level of flexibility with regulation making powers does not meet the Welsh Government’s own principles, giving the potential to reduce business confidence. 

“We received representations from a number of stakeholders regarding the proposed communities scheme, which uses some of the tax revenue raised to support local community and environmental projects near landfill sites.

“Stakeholders are extremely concerned that the Welsh Government’s decision to operate the scheme outside of the Bill means that this funding will not be safeguarded. We share these concerns and have urged the Government to include in the Bill a statutory duty to establish a communities scheme.

“We have also raised a number of points with the drafting of the Bill, whilst being generally supportive of the intention behind some of the provisions it became apparent that some of the provisions were copied from existing legislation, and actually this Bill could have given the Government an opportunity to improve on existing provisions in relation to landfill.”

The Landfill Disposals Tax (Wales) Bill has been introduced under new taxation powers devolved to the Assembly under the Wales Act 2014.

Currently, landfill tax accounts for around £35 million of the Welsh Government budget, but is projected to fall to around £23 million by 2021/22 under the environmental objective of sending less and less material to landfill.

The Bill will now be debated by the full Assembly before a vote to decide whether it should proceed to stage 2 of the Assembly’s law-making process.

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