Budget confirms aggregates levy increase

AS widely expected, the Budget 2008 confirmed a 35p (22%) increase in the rate of the aggregates levy from £1.60 to £1.95 per tonne from 1 April 2008, with a further rise to £2.00 per tonne from 1 April 2009.

Referring to the announcement, the British Aggregates Association – which is still awaiting a final decision from the European Court of Justice on its legal challenge against the aggregates levy – warned that the rise would add further pressure on a basic industry in increasingly difficult economic times, and would fuel unwanted inflation for the country.

The BAA said that as quarries supply the raw materials for national infrastructure needs, the extra cost would fall squarely and quickly on all taxpayers.

The Association claims that the Chancellor, Alistair Darling, has ignored clear evidence that the aggregates levy is not only failing to deliver its stated objectives, but is actually causing considerable environmental damage.

Richard Bird, the BAA’s executive officer, said: ‘We were told that the levy would be revenue neutral, it wasn’t. We were told the levy would cut the use of virgin aggregate and increase recycling, it hasn’t. We were also told that the levy would be reviewed in line with the Government’s own rules on environmental taxation, and this has not been done either.

‘The levy is not working because it is not designed to deliver environmental benefit; it is designed to collect cash,’ he said.

In his first Budget, Mr Darling also confirmed that the standard rate of landfill tax, currently £24.00 per tonne, will increase by £8.00 to £32.00 per tonne in 2008–09, and will rise by a further £8.00 each year thereafter until at least 2010–11. The lower rate of landfill tax, which currently stands at £2.00, will increase to £2.50 in 2008–09.

He also announced that the Climate Change Levy will be indexed to rise in line with current inflation, with effect from 1 April 2009.

However, the Chancellor did deliver some slightly more welcome news with his announcement that the planned 2p per litre increase in the main road fuel duty rate, which was due come into effect on 1 April 2008, is to be deferred for six months until 1 October 2008.

Responding to this announcement, the Freight Transport Association said that while the decision to defer the increase in fuel duty until 1 October was very welcome, the rise should have been put off for at least a year while the market remains so turbulent. The Association added that it will be seeking a further deferment after 1 October.