Dear The Skip,
Not too long ago, Mr Darling and Mr Brown decided that they needed a lot more tax to help fill the hole of incompetence they find themselves in. So in their wisdom they decided to ambush the landfill tax with an escalator that has left many in the industry wondering what the hell happened. As one manager from a large national company said to me last year, “The £8 per tonne has caught us all out and it’s going to hurt”. Tough s***, I say, we’ve seen it coming for years and invested – that’s why 98% of all our waste comes through our MRF and that’s why they’ve been caught out. I must confess I find it difficult to sympathise with such comments when the big players’ press departments then come out with announcements such as “They welcome the tax hike and it will help their company”. What a load of bo****ks !
Mr Darling, on the other hand, can sit back safe in the knowledge that companies such as mine and yours will act as unpaid tax collectors, ensuring his money grubbing government will get every penny without even having to negotiate the rate. Likewise, the Landfill sites have no leverage and they’ve no alternative but to pass it on to the waste carriers. I should remind readers that, at this point, the government’s perception is that the landfill tax cascades down to the waste producers and the ‘polluter pay’ principle is achieved.
I’m afraid this is far from the truth, and let it be said that at this point things start to go very badly wrong. Waste collectors have to pass this tax on to their customers, but the finance act from which the landfill tax is spawned makes no provisions for waste carriers and as such it isn’t a tax we have to pass on, but rather an increased cost of working. Consequently, more and more waste producers are finding it fair game to screw their waste collection price down when the tax hike comes around each year.
Quite conveniently, the finance act doesn’t allow for any bad debt relief for waste carriers. So if the waste producer goes bust the waste carrier still has to pay the landfill tax to the site operator. And, just to add a twist of concern for the future, you may like to ponder the fact that the exposure on any bad debt that occurs is escalating each year as landfill tax rises. The effects aren’t just limited to bad debt, because even if you manage to pass on the tax to the waste producer without your prices being screwed down, the increased cost of working naturally increases your company’s turnover and most insurance companies calculate their premiums on T/O, so you will be paying higher insurance charges as the tax snowballs for the treasury.
The Governments tax take doesn’t stop there either, because the landfill tax – or rather your increased cost of working – attracts even more VAT and those increasing insurance premiums are subject to IPT (Insurance Premium Tax) so Mr Darling is on to a right winner!
Just this year alone, our company has responded to over 50 customers seeking a reduction in waste collection charges to offset the effects of the landfill tax. One wonders if sending the annual letter to customers warning them of this Mr Darling’s tax increase is a good idea. I’m sure we would have been better off just filling a skip full of £20 notes and setting them on fire!
Just to give you folks reading this some idea of how bad it is out there – all of our work is contracted with terms and conditions that allow for landfill tax increases, but this counts for nothing as waste producers take matters into their own hands. Indeed, as I write this wake up call, our company is dealing with a customer who, because of previous negotiations, hasn’t had an increase for two years and they are currently refusing point blank to accept any increases this year. Suffice to say, we have implemented our right to charge and they have cancelled the contract and are refusing to pay our invoices! To make matters worse, we are now burdened with legal costs as we take action to recover our premature termination losses and unpaid invoices which could take years to recover. The truth of the matter is, many in the waste management industry are the first in line to collect the tax for the government and we remain increasingly vulnerable. Waste carriers have become unpaid landfill tax collectors for H.M. Customs and the amounts we collect continue to grow significantly each year. This incurs more admin costs and the risks are becoming so great that, if a waste producer goes bust, the debt associated with the landfill tax could easily be 60% of your invoice total. And if you can’t stand the hit, you could find yourself in the hands of the receivers.
We recognised the impending problems 12 years ago and raised these very issues with the then Prime Minister, John Major, and the Treasury MP David Heathcoat-Amory. Suffice to say, the door was closed in my face and that’s the way it’s stayed ever since. Behind that door today sits Mr Darling. He needs to recognise these problems and provide our industry with some protection, similar to the bad debt relief afforded to landfill operators. Quite why the like of the ESA (The Environmental Services Association) have never addressed these matters is a mystery. I know for a fact that the Road Haulage Association waste group has raised concerns, so someone else is speaking out but what’s needed is a collective voice.
I’m sure many people involved in the waste management industry will relate to my concerns. I for one will be writing to my M.P. and the Chancellor expressing my unease. If you share my sentiments you will do the same.
Regards,
Peter Allen
Director, ISM Waste Recycling
THE SKIP SAYS: Thanks for your letter, Peter. Your frustration is no doubt echoed throughout the industry. It’s great to hear of people like yourself taking action rather than just accepting what is handed down. Is anyone else out there joining Peter in making a stand against this? Let us know.