First green tax is 'a shot in the dark'

Officials implementing Britain's new pounds 500m landfill tax have no idea how much it will cut the amount of waste being tipped. Even the Customs and Excise department's estimates of rubbish now going into the country's 1,700-plus dumps is in doubt, with industry sources putting the figure at 30m tonnes a year less than the Government's calculation of 100m tonnes.

The measure, which goes into effect on Tuesday, is being touted by the department as Britain's first Green tax, and could be followed by others, such as a carbon tax on fuel. But industry critics say the woolly calculations will make it almost impossible to tell whether it has succeeded in its aim of reducing waste.

The amount of rubbish to be taxed is a critical part of the equation. Whitehall plans to use the tax to offset a pounds 500m reduction in National Insurance contributions, so a shortfall in the amount of waste could leave a hole in the public accounts that would likely be filled by a higher tonnage rate.

The tax is already set to almost double the gate fees charged by dumps from an average pounds 8 per tonne to pounds 15. Even if it does prove to be revenue neutral for the treasury, it will not necessarily be so for companies. Businesses that have a lot of employees but produce little solid waste will gain, while those with few staff and lots of garbage will suffer.

Their pain could get worse after the next election. Influential Labour thinkers, including the Institute for Public Policy Research, have called for British landfill taxes to rise to European levels. The institute suggested pounds 25 a tonne. Industry sources said some Europeans face charges as high as pounds 50 a tonne.

Tip operators, who will be responsible for paying the tax, are also wondering whether they will be able to recover the cost from their customers. "It's going to be a trauma for the waste industry," predicted Peter Jones, a director of Biffa Waste Services, Britain's third largest waste collection and disposal company. "It's a shot in the dark."

Initially the new tax probably will not make much of a dent in the trash mountain. Companies already implementing waste reduction programmes will continue to do so, and those that are not will simply grin and bear it. Any reduction will come over the longer term as costs filter through to operating profits.

Some less scrupulous operators may resort to fly tipping. The Government is relying on stiff anti-pollution regulations to ensure that the practice does not become more common.

Cutting the amount of material used in packaging would free resources and reduce manufacturing costs. But increased recycling would not be withoutpenalties. Plastics, for example, often have to be washed before they can be reprocessed, adding to the amount of polluted water. And achieving a 10 per cent reduction in the waste going to landfills - the Government's target for 2005 - would cost pounds 70 a tonne in tax.