Clause 127 - Aggregates levy: amendments to provisions exempting spoil etc

Part of Finance Bill – in a Public Bill Committee at 10:30 am on 25th June 2002.

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Photo of Christopher Chope Christopher Chope Shadow Spokesperson (Transport) 10:30 am, 25th June 2002

I hope that amendment No. 255 finds favour with all members of the Committee. It would

make water exempt from the aggregates tax. The Government never said anything about wanting to tax water but, effectively, that is what is happening under the present arrangements. Customs makes an allowance for water added through washing or dust dampening but apparently is unable to make any reduction to take account of naturally occurring water—rainwater and groundwater. That imposes a disadvantage on quarries that extract aggregates from below the water table. Obviously, it is a big disadvantage for dredged aggregate as well.

This is not some mere academic debate. The total amount of the levy that is payable by a wet quarry is about 7 per cent. more than for a dry quarry. I hope that the Economic Secretary can explain why the Government feel it appropriate to tax the water content of aggregates. Surely that was not what they intended initially.

A consequence of the present regime is that every one of the 488 businesses registered for the levy has been visited by Customs officers who have tried to draw up site-specific formulae to calculate the levy for each quarry, taking into account how much of the aggregate is wet and how much is dry, and the reason that it is wet rather than dry. That adds enormously to red tape, bureaucracy and compliance costs. We understand that the compliance costs are 30p per tonne for the average small quarry.