Scottish Aggregates Levy: evidence review and policy options

Research reviewing, modelling and analysing illustrative options for a Scottish specific Aggregate Levy.


Footnotes

1. https://www.gov.uk/government/publications/review-of-the-aggregates-levy

2. https://www.gov.uk/government/publications/review-of-the-aggregates-levy/review-of-the-aggregates-levy-discussion-paper

3. https://researchbriefings.files.parliament.uk/documents/SN01196/SN01196.pdf

4. https://researchbriefings.files.parliament.uk/documents/SN04744/SN04744.pdf

5. https://www.gov.uk/guidance/scotland-act-2012

6. https://www.gov.uk/government/topical-events/scottish-independence-referendum

7. https://www2.gov.scot/Topics/constitution/smith-commission

8. https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-02-08/HCWS1315/

9. https://www.gov.uk/government/publications/review-of-the-aggregates-levy/review-of-the-aggregates-levy-discussion-paper

10. ECOTEC et al. (2001) Study on the economic and environmental implications of the use of environmental taxes and charges in the European Union and its Member States, Report for DG Environment, European Commission.
https://ec.europa.eu/environment/enveco/taxation/environmental_taxes.htm

11. Externalities refers to situations when the effect of production or consumption of goods and services imposes costs or benefits on others which are not reflected in the prices charged for the goods and services being provided.

12. See for example, https://www.gov.scot/policies/managing-waste/

13. https://www.gov.uk/government/publications/the-agreement-between-the-scottish-government-and-the-united-kingdom-government-on-the-scottish-governments-fiscal-framework

14. See for example, https://www.gov.scot/publications/fiscal-framework-factsheet/pages/overview/

15. https://www.gov.uk/government/publications/excise-notice-agl1-aggregates-levy/excise-notice-agl1-aggregates-levy

16. https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-02-08/HCWS1315/

17. Rate of the UK Landfill Tax, on the other hand, gradually increased since its introduction in 1996 from £7 per tonne (standard rate) to £91.35 per tonne in 2019.

18. Commercial exploitation is defined as when it is removed from the aggregate's originating site (e.g. quarry); when subject to a written agreement to supply; or when mixed with anything other than water.

19. https://www.gov.uk/government/statistics/aggregates-levy-bulletin

20. https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk

21. Lockhart-Mummery, E. (2015) UK Aggregates Levy & Sustainability Fund, presentation given at UK Expert Visit to Israel.

22. IEEP et al., 2017. Capacity building, programmatic development and communication in the field of environmental taxation and budgetary reform. Report for the DG Environment of the European Commission.

23. Eunomia Research & Consulting et al. (2009) International review of waste management policy: Summary report, report for Department of Environment Heritage and Local Government (Ireland).

24. ECOTEC et al. (2001) Study on the economic and environmental implications of the use of environmental taxes and charges in the European Union and its Member States, Report for DG Environment, European Commission.
https://ec.europa.eu/environment/enveco/taxation/environmental_taxes.htm

25. ibid.

26. https://ec.europa.eu/environment/integration/green_semester/pdf/EFRIS%20-%20Data%20from%20Report_2016.xlsx

27. Average weight of 1 m3 crushed rock is approximately 1.6 tonnes.

28. BGS (2019) United Kingdom Minerals Yearbook 2018.
https://www.bgs.ac.uk/downloads/start.cfm?id=3514

29. https://www.gov.uk/government/collections/building-materials-and-components-monthly-statistics-2012

30. https://www.gov.uk/government/statistics/mineral-extraction-in-great-britain-2014

31. https://www.gov.uk/government/publications/aggregate-minerals-survey-for-england-and-wales-2014

32. Office of Fair Trading (2011) Aggregates: Report on the Market Study and Proposed Decision to Make a Market Investigation Reference. August 2011.
https://assets.publishing.service.gov.uk/media/532ad455e5274a226b000303/oft1358.pdf

33. Competition Commission (2014) Aggregates, Cement and Ready-Mix Concrete Market Investigation. Final Report. 14th January 2014.
https://assets.publishing.service.gov.uk/media/552ce1d5ed915d15db000001/Aggregates_final_report.pdf

34. Office of Fair Trading (2011) Aggregates: Report on the Market Study and Proposed Decision to Make a Market Investigation Reference. August 2011.
https://assets.publishing.service.gov.uk/media/532ad455e5274a226b000303/oft1358.pdf

35. https://www.mineralproducts.org/documents/Facts-at-a-Glance-2018.pdf

36. https://www.british-aggregates.co.uk/list-of-baa-members/

37. BGS (2019) United Kingdom Minerals Yearbook 2018.
https://www.bgs.ac.uk/downloads/start.cfm?id=3514

38. https://www.gov.uk/government/statistics/mineral-extraction-in-great-britain-2014

39. The Strategic Development Planning Authority for Edinburgh and South East Scotland.

40. https://www.gov.uk/government/statistics/port-freight-annual-statistics-2018-final-figures

41. BGS (2016) Coalition of the Results of the 2014 Aggregate Minerals Survey for England and Wales. Report for the Department for Communities and Local Government and Welsh Government. March 2016.

42. Mineral reserves with a valid planning consent.

43. The Scottish Government (2007) Scottish Aggregates Survey 2005. November 2007.

44. The Scottish Government (2007) Scottish Aggregates Survey 2005. November 2007.

45. East Dunbartonshire Council (2017) Local Development Plan. 23rd February 2017.
https://eastdunbarton.gov.uk/sites/default/files/filedepot/Local%20Development%20Plan.pdf

46. West Dunbartonshire Council (2018) Local Development Plan 2. September 2018.
https://www.west-dunbarton.gov.uk/media/4315752/ldp-proposed-plan-final_web2.pdf

47. MPA (2018) AMPS 2018 - 7th Annual Mineral Planning Survey Report.
https://mineralproducts.org/documents/7th_AMPS_Report_2018.pdf

48. BGS (2004) The Economic Importance of Minerals to the UK
https://www.bgs.ac.uk/mineralsuk/planning/economy.html

49. Mineral Product Association Fact File
https://mineralproducts.org/iss_fact01.htm

50. Mineral Product Association General Issues
https://mineralproducts.org/iss_key01.htm

51. BGS (2004) The Economic Importance of Minerals to the UK
https://www.bgs.ac.uk/mineralsuk/planning/economy.html

52. Private communication from the MPA

53. Without any reliable data on imports and exports of primary aggregates between Scotland and the rest of the world (outside the UK), it was assumed that all modelled imports and exports of primary aggregates are between Scotland and the rest of the UK.

54. It should be noted that these four policy options selected for the modelling exercise are purely illustrative and don't represent the 'actual' tax options being considered by the Scottish Government.

55. We have also modelled this scenario with the Scottish Aggregates Levy rate set to zero. However, the results were very similar to the results under Policy Option 3 (Scottish Government Baseline), and therefore the option for separate landfill tax band for aggregates with zero aggregates levy rate has not been considered further.

56. Log-log functional form reflects constant elasticity of demand (responsive of demand to price changes), which is more consistent with the observed data.

57. BGS (2019) United Kingdom Minerals Yearbook 2018.
https://www.bgs.ac.uk/downloads/start.cfm?id=3514

58. https://www.fiscalcommission.scot/forecast/scotlands-economic-and-fiscal-forecasts-may-2019/

59. https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections

60. This is based on groups of combined planning authorities of Scotland rather than particular local authority areas.

61. Two types of externality costs were modelled - disamenity costs associated with aggregates extraction, and CO2 emissions from production and transportations of aggregates. Please see Appendix 3 for a detailed discussion of these externality costs and how these were calculated.

62. The Scottish Government (2015) Scottish Aggregates Survey 2012, June 2015,
http://www.gov.scot/Resource/0047/00479064.pdf

63. Office for National Statistics (2014) Mineral Extraction in Great Britain 2012 - Business Monitor PA1007, February 2014

64. Log of demand has been used in the forecasting model as it reflects constant elasticity of demand (responsive of demand to price changes), which is more consistent with the observed data.

65. https://www.sepa.org.uk/environment/waste/waste-data/waste-data-reporting/waste-data-for-scotland/

66. The following two categories from this dataset were used in our analysis: 'Mineral waste from construction and demolition' and 'Other mineral wastes'

67. The National Archives (2016) Scotland Act 2016, March 2016,
http://www.legislation.gov.uk/ukpga/2016/11/contents/enacted

68. Mygov.scot (2017) Environmental Taxes, Reliefs and Schemes for Businesses, 8th December 2017,
https://www.mygov.scot/green-taxes-reliefs/aggregates-levy/

69. https://www.gov.uk/government/collections/building-materials-and-components-monthly-statistics-2012

70. BGS, 2008. The need for aggregates production in England.

71. https://www.gov.uk/government/collections/building-materials-and-components-monthly-statistics-2012

72. https://thetruckexpert.co.uk/truck-operating-costs-report-for-2018/

73. https://mineralproducts.org/sustainability/transport.html

74. Department of the Environment, Transport and the Regions (DETR), 1998. The Environmental Costs and Benefits of the Supply of Aggregates. Report by London Economics. DETR, London.

75. London Economics, 1999. The Environmental Costs and Benefits of the Supply of Aggregates. Report to the Department of Environment, Transport and the Regions. DETR, London.

76. Willis, K.G. and G.D. Garrod, 1999. Externalities from extraction of aggregates Regulation by tax or land-use controls, Resources Policy 25 (1999) 77-86

77. Brown et al., 2011. Aggregates in England - Economic contribution and environmental cost of indigenous supply. Resources Policy 36 (2011) 295-303

78. Söderholm, P., 2011. Taxing virgin natural resources: Lessons from aggregates taxation in Europe. Resources, Conservation and Recycling 55 (2011) 911- 922.
https://www.sciencedirect.com/science/article/pii/S0921344911000942

79. ECOTEC et al. (2001) Study on the economic and environmental implications of the use of environmental taxes and charges in the European Union and its Member States, Report for DG Environment, European Commission.
https://ec.europa.eu/environment/enveco/taxation/environmental_taxes.htm

80. Söderholm, P., 2011. Taxing virgin natural resources: Lessons from aggregates taxation in Europe. Resources, Conservation and Recycling 55 (2011) 911- 922.
https://www.sciencedirect.com/science/article/pii/S0921344911000942

81. Söderholm, P., 2011. Taxing virgin natural resources: Lessons from aggregates taxation in Europe. Resources, Conservation and Recycling 55 (2011) 911- 922.
https://www.sciencedirect.com/science/article/pii/S0921344911000942

82. IEEP et al. 2016 Capacity building, programmatic development and communication in the field of environmental taxation and budgetary reform - Case study on the Mineral Resource Extraction Charge in Estonia.
https://ieep.eu/uploads/articles/attachments/f42e1732-8ecf-4db3-9175-4a5eb78acb98/EE%20Mineral%20Extraction%20Charge%20final.pdf?v=63680923242

83. The ENDS Report (2003) Treasury Hits Rocks Over Aggregates Levy, 1 November 2003.

84. The ENDS Report (2000) Northern Ireland Seeks Exemption from Aggregates Levy, 1 December 2000.

85. QPANI letter to the European Commission Directorate-General for Competition, 18 December 2013

86. Aggregates Business Europe (2009) Ireland has Twin Aggregate Markets, March 2009.

QPANI (2015) Briefing Paper for NI Members of Parliament regarding on-going discussions with Treasury about re-introduction of a reduced Aggregates Levy in Northern Ireland, July 2015.

87. QPANI (2015) Briefing Paper for NI Members of Parliament regarding on-going discussions with Treasury about re-introduction of a reduced Aggregates Levy in Northern Ireland, July 2015.

88. Ibid.

89. However, it should be noted that import decisions should not be affected by the presence of a levy as long as imports are levied at the same rate as the domestic rate and strict enforcement is exercised to control illegal imports.

90. Symonds Group Ltd (2003) Report to HM Customs & Excise: Assessment of the State of the Construction Aggregates Sector in Northern Ireland. Final Report. 31 October 2003.

91. Ibid.

92. House of Commons Northern Ireland Affairs Committee (2004) Introduction of the Aggregates Levy in Northern Ireland: One Year On. Third Report of Session 2003-04, 10 March 2004.
https://publications.parliament.uk/pa/cm200304/cmselect/cmniaf/395/395.pdf

93. Symonds Group Ltd (2003) Report to HM Customs & Excise: Assessment of the State of the Construction Aggregates Sector in Northern Ireland. Final Report. 31 October 2003.

94. Aggregates Business Europe (2009) Ireland has Twin Aggregate Markets, March 2009.

95. Ibid.

96. Symonds Group Ltd (2003) Report to HM Customs & Excise: Assessment of the State of the Construction Aggregates Sector in Northern Ireland. Final Report. 31 October 2003.

97. Ibid.

98. The ENDS Report (2003) Treasury Hits Rocks Over Aggregates Levy, 1 November 2003.

99. Symonds Group Ltd (2003) Report to HM Customs & Excise: Assessment of the State of the Construction Aggregates Sector in Northern Ireland. Final Report. 31 October 2003.

100. The ENDS Report (2000) Northern Ireland Seeks Exemption from Aggregates Levy, 1 December 2000.

101. Aggregates Business Europe (2009) Ireland has Twin Aggregate Markets, March 2009.

102. QPANI Aggregates Levy Booklet, June 2010.

103. Hansard (2004) House of Commons Written Ministerial Statement, 11 May 2004, c8WS
https://www.theyworkforyou.com/wms/?id=2004-05-11.8WS.4

104. QPANI Aggregates Levy Booklet, June 2010.

105. Ibid.

106. The ENDS Report (2003) Treasury Hits Rocks Over Aggregates Levy, 1 November 2003.

107. Hansard (2004) House of Commons Written Ministerial Statement, 11 May 2004, c8WS

108. European Commission (2004) Commission Approves Modified Aggregates Levy for Northern Ireland, 7 May 2004.
http://europa.eu/rapid/press-release_IP-04-614_en.htm?locale=en

109. https://www.gov.uk/government/news/governments-aggregates-levy-credit-scheme-in-line-with-state-aid-rules

110. QPANI (2015) QPANI Call for Urgent Action to Stop Aggregates Levy Uncertainty

111. http://www.legislation.gov.uk/uksi/2015/946/pdfs/uksiem_20150946_en.pdf

112. https://www.gov.uk/government/publications/revenue-and-customs-brief-5-2015-aggregates-levy-tax-credits-in-northern-ireland/revenue-and-customs-brief-5-2015-aggregates-levy-tax-credits-in-northern-ireland

113. Employment figures have not been provided in the 2017 data.

114. https://www.nisra.gov.uk/statistics/business-statistics/annual-business-inquiry#toc-4

Contact

Email: robert.souter@gov.scot

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