NI Aggregates Levy rebate to be suspended

CONSTRUCTION costs are set to increase. That is the message from suppliers of stone, concrete products and road surfacing materials in Northern Ireland following confirmation that the tax rebate on the quarrying of stone in the province is to be suspended from 1 December 2010.

The UK Treasury has announced the suspension of the Aggregates Levy Credit Scheme (ALCS) as a result of an EU General Court decision on 9 September 2010 which identified that certain aspects of the EU Commission’s 2004 decision to grant the rebate to Northern Ireland were incompatible with EU state aid rules.

According to the Quarry Products Association Northern Ireland (QPANI), the suspension will result in a 40% increase in stone prices, a 10% increase in concrete and a 15% increase in road surfacing materials. This will make quarrying companies, particularly those within 20 miles of the border, uncompetitive compared with companies in the Republic of Ireland where there is no similar tax on stone.

QPANI says there is no doubt that this will impact on jobs within the quarrying industry and the wider construction industry. The Association’s regional director, Gordon Best, said: ‘This is a devastating blow not only for the quarry products and construction industries, but also for the rural economy where many jobs depend on the quarry products sector.

‘The current scheme that facilitates the tax rebate was due to come to an end on 31 March 2011 and we had been working with the Treasury and the EU Commission to develop a replacement that would last from 2011 to 2021. We wanted to see the end of the existing scheme coincide with the introduction of the new one, but that is not to be.

‘The only glimmer of hope we can take from this is that the Government and EU Commission are committed to ALCS in the long term and that they will work to develop, approve and implement a new scheme as soon as possible.

‘We will now focus our attention on working with our MEPs, MLAs and the Department of Finance to ensure that the legitimate industry is protected from illegal operators and untaxed imports. We also will be pressing the Treasury and the EU Commission to work effectively and quickly to have the new scheme and rebate introduced as quickly as possible so that the negative impact on the industry and the economy can be kept to a minimum.’

The British Aggregates Association (BAA), which led the challenge against the Aggregates Levy derogation in Northern Ireland on the grounds that it disregarded EU competition law and discriminated against UK mainland quarries, said that while it accepted that the suspension of the rebate did have the potential to cause difficulties for NI operators, the derogation was only ever a sticking-plaster solution and had a limited time span.

It added that for any proper environmental levy to have credibility, it must be UK-wide, with no exceptions, and with the revenue used only for the benefit of the local community.