Breaking New Ground? Developing a Scottish tax to replace the UK Aggregates Levy: consultation

The Programme for Government 2022 to 2023 sets out a commitment to introduce a Scottish Aggregates Levy Bill. To help inform the Bill, this consultation invites views on how a new and distinctive Scottish aggregates tax, replacing the current UK levy, should be structured and operate.

Ministerial Foreword

Our tax system plays an integral role in funding the public services we all rely on in Scotland. Our Framework for Tax provides the foundation from which we can design and deliver tax policies that support our recovery from Covid-19, national outcomes and our pursuit of a fairer, greener and more prosperous Scotland for everyone. It sets out our vision for tax in Scotland, which is underpinned by policy and delivery excellence, best practice, open government and transparency. This way, we can position tax policy to meet the challenges of today and tomorrow.

Representing another step on that journey, this consultation seeks your views to inform a Bill on a devolved tax to replace the UK Aggregates Levy. When introduced, the tax will increase both the range of tax powers available to Scottish Ministers, and the proportion of Scotland's budget that is raised from Scottish taxes.

The UK Aggregates Levy is an environmental tax that aims to reduce the extraction of primary (i.e. new) aggregate. In general, it applies to the commercial exploitation of primary aggregates – mostly crushed rock, gravel and sand – which are used in housebuilding, infrastructure, landscaping, environmental protection and much more.

The Scotland Act 2016 provides the Scottish Parliament with the power to introduce a devolved tax to replace the UK levy. The Scottish Government intends that such a devolved tax will align with our overall ambitions for sustainable economic growth in Scotland, and support our circular economy strategy and objectives.

While the extraction and production of aggregates creates and support jobs, many in remote and rural communities, the extraction of primary aggregates in particular can also create a negative environmental impact. As set out in our recently published draft Waste Route Map, we seek to embed circular construction practices to reduce resource needs, reduce waste and carbon, and encourage refurbishment and reuse. This devolved tax will form part of our approach to achieving that.

To help inform our next steps, we are seeking views on how a new and distinctive Scottish aggregates tax, replacing the UK levy, should be structured and operate.

We will take current UK levy arrangements into account but wish to consider the case for enhancements that will ensure that the tax is well-designed, takes full account of the Scottish context and maximises opportunities offered by devolution.

We are keen that the tax is developed collaboratively with stakeholders and in line with the Scottish Approach to Taxation, as set out in our Framework for Tax. We would like to hear from as wide a variety of individuals and organisations as possible, particularly those involved with the aggregates business, construction and infrastructure, environmental, tax, accountancy and legal sectors. We also intend to organise events to discuss relevant issues with stakeholders.

I hope you find this document interesting and useful, and would welcome your input and support as we progress the development of a Scottish aggregates tax.

Tom Arthur MSP

Minister for Public Finance, Planning and Community Wealth



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