Number: WG24170 Welsh Government Consultation Document Landfill Disposals Tax Date of issue: 24 February 2015 Action required: Responses by 19 May 2015 Overview Contact details This consultation seeks views on proposals for For further information: Landfill Disposals Tax. Tax Policy and Legislation Division 2nd Floor East How to respond Welsh Government Responses to this consultation should be Cathays Park submitted to arrive by 19 May 2015 at Cardiff, CF10 3NQ the latest. Responses can be submitted either: E-mail: electronically via the online form: [email protected] http://wales.gov.uk/consultations/finance/landfill- disposals-tax/?lang=en Data protection E-mailed to: How the views and information you give us [email protected] will be used (please enter ‘Landfill Disposals Tax’ in the Any response you send us will be seen in full by subject matter box). Welsh Government staff dealing with the issues Or, posted to: which this consultation is about. It may also be Tax Policy and Legislation Division seen by other Welsh Government staff to help 2nd Floor East them plan future consultations. Welsh Government The Welsh Government intends to publish a Cathays Park summary of the responses to this document. Cardiff, CF10 3NQ We may also publish responses in full. Normally, the name and address (or part of the address) Further information and related of the person or organisation who sent the documents response are published with the response. This Large print, Braille and alternate language helps to show that the consultation was carried versions of this document are available on out properly. If you do not want your name or request. address published, please tell us this in writing when you send your response. We will then The consultation documents can be accessed blank them out. from the Welsh Government’s website at: www.wales.gov.uk/consultations Names or addresses we blank out might still The consultation on a Land Transaction Tax get published later, though we do not think can be accessed from the Welsh Government’s this would happen very often. The Freedom of website at: www.wales.gov.uk/consultations Information Act 2000 and the Environmental Information Regulations 2004 allow the public The consultation and analysis of responses on to ask to see information held by many public the Collection and Management of Devolved bodies, including the Welsh Government. Taxes White Paper can be accessed from the This includes information which has not been Welsh Government’s website at: published. However, the law also allows us to www.wales.gov.uk/consultations withhold information in some circumstances. Details of the Commission on Devolution in If anyone asks to see information we have Wales (Silk Commission) first report, the UK withheld, we will have to decide whether to Government’s response to the first report and release it or not. If someone has asked for their the Wales Bill can be accessed from the Welsh name and address not to be published, that is Government’s website at: an important fact we would take into account. http://wales.gov.uk/funding However, there might sometimes be important financereform/?lang=en reasons why we would have to reveal someone’s name and address, even though they have asked for them not to be published. We would get in touch with the person and ask their views before we finally decided to reveal the information. Digital ISBN 978 1 4734 1327 6 © Crown Copyright 2015 Landfill Disposals Tax Content Ministerial Foreword Page Chapter 1: Introduction and Policy Background 4 Chapter 2: Tax Rates and Taxable Disposals 14 Chapter 3: Compliance and Enforcement 24 Chapter 4: Administration 32 Chapter 5: Community Wellbeing 38 Appendix 1: Summary of the Landfill Tax (Qualifying Material) Order 2011 Appendix 2: Consultation response form, including summary of consultation questions Appendix 3: Glossary of terms Appendix 4: Initial Regulatory Impact Assessment 1 Landfill Disposals Tax Ministerial Foreword The passage of the Wales Act 2014 means that the way Welsh public services are funded will be changing over the next few years. One of the most important developments is that the National Assembly has been given new powers to develop its own devolved taxes, beginning with replacements for the UK Government's Landfill Tax and Stamp Duty Land Tax. This means that for the first time in almost 800 years we are able to design and deliver taxes that suit the particular circumstances of Wales. The Welsh taxes are due to be introduced from April 2018, and in the meantime there is much to prepare. Underlying all the Welsh Government's initial development work have been my four tax principles: I am seeking to introduce taxes which are fair to the businesses and individuals who pay them; which are simple, with clear rules which minimise compliance and administration costs; which provide stability and certainty for taxpayers; and which support growth and jobs, which will in turn help to tackle poverty. This consultation on a Landfill Disposals Tax is the last of three that I am issuing to gain your views on the new powers. The existing Landfill Tax is a significant driver of environmental behaviour, encouraging greater prevention, re-use, recycling and recovery of waste. Its devolution therefore provides us with a useful additional lever to support Welsh Government policies, including the pursuit of our ambitious goal of zero waste. Through this consultation, I am keen to identify opportunities to address aspects of the existing tax which may be confusing or cause uncertainties, and I wish to consider whether and how a proportion of the tax revenue might be used to enhance community wellbeing. I am also seeking to modernise the administration of the tax, enabling it to operate more efficiently, minimising the burdens on business. However, I am not looking to introduce changes where they are not warranted. Indeed, I recognise that there may be areas where it will be preferable to maintain consistency with England and Scotland. An essential aspect of the tax development work covers compliance. This means I want to ensure that all those who have waste to dispose of comply with the tax fully and properly. Tax avoiders and evaders will be treated equitably in Wales and challenged robustly, regardless of circumstances – seeking to avoid payment is simply unacceptable. The consultation therefore asks for your views on how we can encourage compliance, and on the steps we should take in response to non-compliance. 2 Landfill Disposals Tax Landfill Disposals Tax will affect a broad range of interests - businesses, regulators, communities and the Third Sector. I am seeking to consider the fullest range of options through this consultation, so I encourage you to share your ideas on how we can design this tax so that it works well for Wales. I look forward to reading your proposals. Jane Hutt Minister for Finance and Government Business February 2015 3 Landfill Disposals Tax Chapter 1: Introduction and Policy Background Devolution of tax powers 1.1 In November 2012 the Commission on Devolution in Wales (the Silk Commission), published its first report on the financial and constitutional arrangements in Wales. The Welsh Government welcomed the report and subsequently the UK Government set out a package of tax and borrowing powers for Wales. 1.2 The Wales Act 2014 passed recently by Parliament sets out these new fiscal powers for Wales including the devolution of Landfill Tax, Stamp Duty Land Tax and an element of Income Tax subject to a referendum. The Wales Bill: Financial Empowerment and Accountability Command Paper sets out the UK Government’s intention that Landfill Tax and Stamp Duty Land Tax will cease to apply in Wales from April 2018. 1.3 In preparation, last autumn the Welsh Government published a consultation on the collection and management arrangements for devolved taxes1 and this summer it intends to bring forward an Assembly Bill setting out its proposals. This will provide a clear and strong tax governance framework, starting with the establishment of the Welsh Revenue Authority/Awdurdod Cyllid Cymru. The Authority will have the responsibility for tax collection and management of Welsh devolved taxes. 1.4 The operational priorities and processes of a tax collection and management system can only be understood, and indeed be developed, with some clarity about the taxes that they are seeking to collect. This consultation therefore seeks views on the development of a Landfill Disposals Tax. Alongside this, the Welsh Government is also currently consulting on proposals for a Land Transaction Tax to replace Stamp Duty Land Tax in Wales.2 The responses to these consultations will inform the development of policy and legislation. This will enable the next Welsh Government to introduce legislation on these taxes soon after the next election (5 May 2016). Landfill Disposals Tax Consultation 1.5 The Wales Act 2014 clearly limits the scope of the National Assembly’s powers to legislate for a tax on disposals to landfill made in Wales; the replacement tax must therefore relate to this method of waste management. 1 The consultation and analysis of responses on the Collection and Management of Devolved Taxes White Paper can be accessed from the Welsh Government’s website at: www.wales.gov.uk/consultations 2 The consultation on a Land Transaction Tax closes on 6 May 2015 and can be accessed from the Welsh Government’s website at: www.wales.gov.uk/consultations 4 Landfill Disposals Tax 1.6 Landfill Tax is complex. The Welsh Government is aware of the interdependencies between differential tax rates across borders, the challenges of compliance and enforcement, and the dis-amenity impact of landfill sites and illegal waste activity on communities.