The Chancellor’s decision to continue the freeze in the Aggregates Levy for 2021/22 is welcomed by the Mineral Products Association, although future indexation will increase costs for the sector. The confirmation of the removal of red diesel from the sector, and almost all other industrial sectors, is disappointing and will simply raise the cost of our products and the homes and infrastructure they go into.
The Review of the Aggregates Levy in 2019 clearly showed the industry’s positive environmental credentials which have been acknowledged by Government. With significant demand for our members’ products to supply the Government’s infrastructure and housing ambitions, it is welcome that this tax burden on producers has not been increased in the short term but it is disappointing that it will be increased by indexation in the future.
The decision to remove the red diesel exemption from the sector in 2022 is a £100 million tax raid on an industry that is still recovering from the economic impact of the Coronavirus pandemic. With no alternatives to diesel-powered equipment on or even near the market yet, the industry has no opportunity to switch equipment but will just face increased taxes. In a global market for equipment the incentive effect on suppliers will be insignificant.
Nigel Jackson, Chief Executive of the MPA, said:
“The announcement on the Levy is good news in the short term but the intention to return to annual indexation from next year is not. There is still unfinished business on the review, such as the Community Fund that we proposed, and several further consultations are expected.
“On red diesel it is a disappointing decision that is really just a soft target tax raid. Our sector pays its fair share of environmental taxes already and has a great track record on reducing carbon and contributing to biodiversity net gain. We will shift away from diesel when the suppliers bring their alternatives to the market, but that’s not going to happen for some years.
“It is very disappointing that the Chancellor has decided to press ahead with these tax increases from next year. There are other sectors whose environmental footprints are far greater than ours who consistently escape environmental taxation and some who even receive subsidies. Government needs to create greater parity across all business to ensure there is a logical basis for the imposition of green taxes”.
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