The Northern Ireland Affairs Committee has agreed
to the following report:-
INTRODUCTION OF THE AGGREGATES LEVY IN
The Finance Act 2001 provides for a levy of £1.60
on every tonne of aggregate - sand, gravel, rock and related products
such as asphalt - extracted or commercially exploited in the UK.
This levy has been designed as a 'green' tax, in keeping with
the Government's intention to "reform the tax system to increase
incentives to reduce environmental damage".
The Government hopes that imposition of the levy will encourage
users of aggregate to make better use of recycled aggregate, and
other more environmentally-friendly material.
However, the proposal has the potential to cause
particular problems in Northern Ireland which the Government has
until recently omitted to consider. Unlike the rest of the UK,
Northern Ireland has a land border with another state. The availability
of readily accessible levy-free products made from aggregates
in the Republic of Ireland seems likely to displace demand rather
than transforming it as the Government hopes. Evidence suggests
that the additional transport costs arising from importing such
material into Northern Ireland will only cancel out the price
differential some 25 or 30 miles inside the Northern Ireland border.
The consequence of introducing the levy in Northern
Ireland will not be a greater use of other materials but the export
of jobs to the Republic and increased lorry transport across the
border, creating more pollution. In the absence of alternative
materials in any quantity, the principal customers for aggregates,
the public construction sector, will have to spend a greater proportion
of fixed budgets on essential materials. The rate of investment
in regeneration will decrease.
The Government acknowledged the difficulties in Northern
Ireland through a temporary concession in the Pre-Budget Report
on 27 November. We welcome this but believe a more lasting solution
is still required.
1 Environmental taxation - statement of intent, H M
Treasury press release, 2 July 1997 Back