Chamber
Meeting of the Parliament 17 December 2013
17 Dec 2013 · S4 · Meeting of the Parliament
Item of business
Landfill Tax (Scotland) Bill
I welcome Mr Crawford’s comments. He has advanced the interests of his constituents in the Blanefield area using all means available to him through the legislation. We will continue that discussion as we formulate the regulations that will implement the bill.
The public consultation on our proposals ran from October last year through to January 2013, and we asked consultees about two changes to the landfill tax. The first main change that we propose for the fund is the taxation of illegal disposals of waste. We had several reasons for bringing that forward.
First, illegal dumping is a problem with significant environmental impacts. It is an environmental crime and is rightly pursued and prosecuted as such. The additional penalty of a tax charge on illegal disposal should act as a powerful disincentive and prevent dumping.
Secondly, illegal dumping undermines legitimate waste operators, including landfill operators. Our proposals will support and encourage the great majority of enterprises in the industry that operate responsibly.
Thirdly, by clamping down on tax evasion in this way, there is an opportunity to gather additional revenue without increasing the tax burden. The Scottish Environment Protection Agency’s knowledge of landfill activity and the industry will be crucial in identifying and prosecuting such cases. SEPA will bring together its tax and environmental protection regimes to achieve more efficient and effective compliance. That proposal has been welcomed by stakeholders.
The second key change that the bill brings about is the introduction of a Scottish landfill communities fund that meets the needs of Scotland. I have already made the Parliament aware of my intention to introduce a proposed enhancement to the tax credit arrangements under which the Scottish landfill communities fund will operate. At present, credits are capped at 6.8 per cent of the total tax liabilities of any operator in a year. As I made clear during the stage 1 debate, we propose to increase that cap by 10 per cent, to 7.48 per cent of an operator’s tax liability. That is intended to encourage operators to make higher contributions to the separate Scottish fund than would otherwise be the case.
As we landfill less, it is inevitable that less money will be available to the fund over the next decade. Increases in the credit cap will not offset that decline in the amount of material going to landfill and, therefore, in tax revenues. I will therefore ensure that the regulations and guidance are drafted so that as large a proportion of fund receipts as possible goes to projects, while the administration costs of the scheme are kept as low as is consistent with satisfactory management. I place on record my concern about the degree and level of the administration costs that are associated with the existing landfill tax scheme. My objective will be to reduce those significantly as part of the regime that we will put in place.
The landfill communities fund has been successful in leveraging match funding and helping communities that are affected by landfill. It is my intention that the Scottish landfill communities fund, which will be introduced in April 2015, will maintain its private funding status. That will allow projects that benefit from the fund also to seek match funding from the Government or the European Union, for example, which can often make a difference to the viability of a project.
I have also given consideration to the regulation of the Scottish landfill communities fund. It is my intention that regulations will provide for SEPA to regulate the fund from April 2015. By making the organisation that will be responsible for collecting the tax responsible for regulating the Scottish landfill communities fund, regulation of the fund and tax administration and collection will be more tightly controlled and more efficient than is the case under the current system.
There are two further points that I wish to make. First, we propose that key elements of the landfill tax, such as tax rates, potential exemptions for hazardous waste, detailed arrangements for tax credits, the operation of the landfill communities fund and the list of the types of waste that will fall into the lower and the higher tax bands, will be set out in secondary legislation. Taking that approach will enable the Scottish Government to consult properly on lists of waste materials and on the operation and administration of the tax. I note that the Delegated Powers and Law Reform Committee has commented on our proposals and is broadly content with them.
The second issue is the overall effect of the landfill tax on the Scottish budget. As Parliament is aware, that will depend on the block grant adjustment mechanism, which is the subject of on-going discussion between the Scottish Government and the UK Government.
I am confident that we will have the legal and administrative systems in place in good time to collect a fair and efficient landfill tax in Scotland from April 2015. We will also have a tax that is appropriate to the distinctive nature of Scotland, that addresses the real issue of illegal dumping and that applies a distinctive approach to tax credits and to the landfill communities fund into the bargain. I look forward to taking the steps to put those measures into legislation.
I move,
That the Parliament agrees that the Landfill Tax (Scotland) Bill be passed.
The public consultation on our proposals ran from October last year through to January 2013, and we asked consultees about two changes to the landfill tax. The first main change that we propose for the fund is the taxation of illegal disposals of waste. We had several reasons for bringing that forward.
First, illegal dumping is a problem with significant environmental impacts. It is an environmental crime and is rightly pursued and prosecuted as such. The additional penalty of a tax charge on illegal disposal should act as a powerful disincentive and prevent dumping.
Secondly, illegal dumping undermines legitimate waste operators, including landfill operators. Our proposals will support and encourage the great majority of enterprises in the industry that operate responsibly.
Thirdly, by clamping down on tax evasion in this way, there is an opportunity to gather additional revenue without increasing the tax burden. The Scottish Environment Protection Agency’s knowledge of landfill activity and the industry will be crucial in identifying and prosecuting such cases. SEPA will bring together its tax and environmental protection regimes to achieve more efficient and effective compliance. That proposal has been welcomed by stakeholders.
The second key change that the bill brings about is the introduction of a Scottish landfill communities fund that meets the needs of Scotland. I have already made the Parliament aware of my intention to introduce a proposed enhancement to the tax credit arrangements under which the Scottish landfill communities fund will operate. At present, credits are capped at 6.8 per cent of the total tax liabilities of any operator in a year. As I made clear during the stage 1 debate, we propose to increase that cap by 10 per cent, to 7.48 per cent of an operator’s tax liability. That is intended to encourage operators to make higher contributions to the separate Scottish fund than would otherwise be the case.
As we landfill less, it is inevitable that less money will be available to the fund over the next decade. Increases in the credit cap will not offset that decline in the amount of material going to landfill and, therefore, in tax revenues. I will therefore ensure that the regulations and guidance are drafted so that as large a proportion of fund receipts as possible goes to projects, while the administration costs of the scheme are kept as low as is consistent with satisfactory management. I place on record my concern about the degree and level of the administration costs that are associated with the existing landfill tax scheme. My objective will be to reduce those significantly as part of the regime that we will put in place.
The landfill communities fund has been successful in leveraging match funding and helping communities that are affected by landfill. It is my intention that the Scottish landfill communities fund, which will be introduced in April 2015, will maintain its private funding status. That will allow projects that benefit from the fund also to seek match funding from the Government or the European Union, for example, which can often make a difference to the viability of a project.
I have also given consideration to the regulation of the Scottish landfill communities fund. It is my intention that regulations will provide for SEPA to regulate the fund from April 2015. By making the organisation that will be responsible for collecting the tax responsible for regulating the Scottish landfill communities fund, regulation of the fund and tax administration and collection will be more tightly controlled and more efficient than is the case under the current system.
There are two further points that I wish to make. First, we propose that key elements of the landfill tax, such as tax rates, potential exemptions for hazardous waste, detailed arrangements for tax credits, the operation of the landfill communities fund and the list of the types of waste that will fall into the lower and the higher tax bands, will be set out in secondary legislation. Taking that approach will enable the Scottish Government to consult properly on lists of waste materials and on the operation and administration of the tax. I note that the Delegated Powers and Law Reform Committee has commented on our proposals and is broadly content with them.
The second issue is the overall effect of the landfill tax on the Scottish budget. As Parliament is aware, that will depend on the block grant adjustment mechanism, which is the subject of on-going discussion between the Scottish Government and the UK Government.
I am confident that we will have the legal and administrative systems in place in good time to collect a fair and efficient landfill tax in Scotland from April 2015. We will also have a tax that is appropriate to the distinctive nature of Scotland, that addresses the real issue of illegal dumping and that applies a distinctive approach to tax credits and to the landfill communities fund into the bargain. I look forward to taking the steps to put those measures into legislation.
I move,
That the Parliament agrees that the Landfill Tax (Scotland) Bill be passed.
In the same item of business
The Deputy Presiding Officer (Elaine Smith)
Lab
The next item of business is a debate on motion S4M-08609, in the name of John Swinney, on the Landfill Tax (Scotland) Bill. I invite members who wish to spe...
The Cabinet Secretary for Finance, Employment and Sustainable Growth (John Swinney)
SNP
I welcome the fact that we have reached the stage 3 debate on the Landfill Tax (Scotland) Bill, which is the second bill establishing devolved taxes in Scotl...
Bruce Crawford (Stirling) (SNP)
SNP
I put on record my thanks to the Government for the way in which it has engaged with me on a matter concerning my constituents in Blanefield. We are grateful...
John Swinney
SNP
I welcome Mr Crawford’s comments. He has advanced the interests of his constituents in the Blanefield area using all means available to him through the legis...
The Deputy Presiding Officer
Lab
There is no time in hand. I call Iain Gray. You have a maximum of seven minutes, but I would like you to take less than that if possible.15:26
Iain Gray (East Lothian) (Lab)
Lab
In the stage 1 debate, I referred to the landfill tax as a new tax. In his closing speech in that debate, the cabinet secretary corrected me—it is, of course...
The Minister for Environment and Climate Change (Paul Wheelhouse)
SNP
Would the member accept that even in the worst-case scenario that is set out in “Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027. The ...
Iain Gray
Lab
I think that the minister has more confidence in RPP2 than I do, but let us see what happens as time unfolds.That said, on diversion from landfill and increa...
The Deputy Presiding Officer
Lab
I now call Gavin Brown, who has five minutes or less.15:33
Gavin Brown (Lothian) (Con)
Con
I think that the bill commands broad support across the chamber. It was a pretty good bill at stage 1 and it has been strengthened marginally during the stag...
The Deputy Presiding Officer
Lab
You are in your final minute.
Gavin Brown
Con
However, it is worth while to think more carefully about the ultimate policy objective of that. Is it simply to tax the same level of investigations as we cu...
The Deputy Presiding Officer
Lab
I am afraid that you must close.
Gavin Brown
Con
It is worth while to reflect on that. We will certainly support the bill this evening.
The Deputy Presiding Officer
Lab
We turn to the open debate. I am afraid that I can only give speeches of three minutes to four members. I apologise to the fifth member, whom I will not be a...
John Mason (Glasgow Shettleston) (SNP)
SNP
It is always good to welcome a new tax, although I take the point that the landfill tax is, in fact, a replacement tax and that it is probable that many peop...
Michael McMahon (Uddingston and Bellshill) (Lab)
Lab
Like the land and buildings transaction tax, the Landfill Tax (Scotland) Bill has been very technical, but it has had a remarkably straightforward and consen...
Kenneth Gibson (Cunninghame North) (SNP)
SNP
As convener of the lead committee, I first thank the clerks, officials and witnesses who helped the Finance Committee in its deliberations as the bill progre...
Malcolm Chisholm (Edinburgh Northern and Leith) (Lab)
Lab
An important argument in favour of increasing levels of fiscal devolution is that it can incentivise economic activity that brings more revenues to this Parl...
The Deputy Presiding Officer
Lab
I apologise to Jean Urquhart, whom I have been unable to call. Gavin Brown, you can have a maximum of four minutes.15:51
Gavin Brown
Con
This has been a pretty good, if short, debate, which did not differ enormously from the debate at stage 1. That reflects the fact that very little has change...
The Deputy Presiding Officer
Lab
I call Iain Gray. I apologise that I can give you only five minutes.15:55
Iain Gray
Lab
This has been a short but interesting debate. It has also been a bit of a Donald Rumsfeld debate because a lot of known unknowns have been discussed. We do n...
John Mason
SNP
I wonder whether the member will accept my main point, which was that we can put more faith in John Swinney than we can in George Osborne.
Iain Gray
Lab
The degree to which we have to put faith in Mr Swinney is exactly the point to which I am coming. I thought that Mr Mason was rising to apologise to the cabi...
John Swinney
SNP
It is a mark of the fact that there has been no real division on the substance of the debate that Mr Mason has been harangued by Mr Brown and Mr Gray. We sho...
Gavin Brown
Con
Does the cabinet secretary accept that one reason for having a three-year lead time was so that we could look at the twice-yearly estimates until a position ...
John Swinney
SNP
It is a lot more stable now because the original estimate was complete baloney. If the member goes back to the December 2012 forecast, he will see that liter...
Mike MacKenzie (Highlands and Islands) (SNP)
SNP
I wonder whether that would encourage us to take other OBR forecasts, for instance for oil and gas revenues, with a very large pinch of salt.
John Swinney
SNP
We have to take care on a lot of those issues. Mr MacKenzie knows that the Scottish Government has a different view from the OBR on oil and gas predictions. ...