Aggregates - to tax or not to tax?

THE last chapter in the long-running debate over the proposed introduction of an aggregates tax appears to be drawing to a close, with the Chancellor expected to make an announcement in this month's Budget.

General consensus within the industry is that the decision whether to impose a tax or accept the industry's 'New Deal' is very finely balanced and could go either way. However, the Quarry Products Association, which has campaigned against the tax since it was first announced in July 1997, says it is satisfied that a genuine process of consideration is currently taking place within government.

A spokesman for the QPA said there had been a lot of discussions and the Government had asked for further clarification on a couple of points in the New Deal. The QPA believes the 30 voluntary measures outlined in the package will deliver environmental benefits more efficiently and cost-effectively than any form of taxation, but the Government is still looking to squeeze more money out of the package to meet what it perceives to be the environmental costs of aggregates extraction. However, support for the New Deal is not coming from all quarters of the quarrying community.

Reaction to the QPA's package of voluntary measures and resistance to the aggregates tax has led Robert Durward, managing director of Lanarkshire-based Cloburn Quarry Co., to set up the British Aggregates Association, a new trade organization whose membership currently comprises around 40 independent producers.

The BAA says an aggregates tax will 'cripple' the industry and it regards the New Deal as an attempt to 'weaken' the independent operators' position even further. The Association is particularly critical of the research carried out by London Economics, on behalf of the DETR, into the environmental costs and benefits of the supply of aggregates.

A recently published review of this research by mineral consultants Wardell Armstrong, commissioned by the BAA, concludes that London Economics concentrated almost exclusively on the environmental costs of aggregates extraction, largely ignored any benefits, and failed to explore the economic implications of a tax on the industry. The review also criticises the statistical methodology used in the research, which, it says, was lacking in robustness. But after all the time and expense the Government has invested in the debate, it is inconceivable that it will drop both the aggregates tax proposal and the offer of the New Deal. And if the Chancellor decides to opt for the latter, it is unclear whether BAA members will be prepared to implement the voluntary measures which they are currently opposing. Whatever the outcome, all should start to become clearer after the Budget on 21 March.