Tax reforms needed to cut business waste, says Lords

20 August 2008

More action is required to reduce the amount of waste produced by businesses, a House of Lords committee has argued.

The Lords Science and Technology Committee has proposed using different rates of VAT in an effort to control the consumption of raw materials.

One current measure aimed at cutting business waste is the landfill tax escalator which will see the tax on landfill increasing annually by £8 per tonne until 2011.

While recognising that the tax has had an effect on the levels of landfill waste, the Committee said it believed other measures were needed to encourage the re-use of materials.

Lord O’Neill, the chair of the sub-committee on waste, said: “We would like to see the VAT regime reformed so that products that have a long life-cycle, or can be easily and cheaply repaired rather than replaced, are made economically more attractive. This would be an important step in turning away from the ‘throwaway’ consumer culture we currently have.”

Another recommendation of the Committee is to ensure that businesses are made responsible for the waste created by their products. Lord O’Neill added that this would mean that manufacturers who behave irresponsibly would face financial consequences, while those “who are doing the right thing would be supported”.

Other proposals put forward by the Committee include earmarking a proportion of the income raised by the landfill tax for those agencies whose job it is to encourage businesses to produce less waste.

Greater emphasis should also be placed on cutting the amounts of materials used in the first place, the Committee said, with recycling a last option.