Clause 129 - Aggregates levy: miscellaneous amendments
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
Very simply, as with a range of other services and goods, the levy is subject to VAT. It is set at £1.60 per tonne. The cost of the environmental impact is greater than that.
On the principle or purpose of the tax, which is where the hon. Member for Christchurch wanted to take the Committee, reports from Alfred McAlpine cited the strong impetus that it is providing for sourcing alternatives to virgin aggregates. Encore Environmental Aggregates, Northern Tyre Disposals, Alcan Smelting and Power UK have all reported recently that they are making moves in a similar direction. A tax rate for the aggregates levy of 50p per tonne plus VAT, as proposed in new clause 28, would not reflect the true environmental cost of aggregates extraction and would not provide sufficient incentive to encourage the efficient use of virgin aggregates and the use of recycled aggregates or other alternatives to virgin aggregates. Not only would the aggregates industry be affected, but the hon. Gentleman's new clause would entail a significant loss to the Exchequer of more than £200 million as the 0.1 per cent. reduction in employer's national insurance contributions that accompanied the introduction of the levy is already in place.