Evaluation of the Landfill Tax on Environmental Outcomes

HM Revenue & Customs (HMRC) has commissioned Ipsos and UCL Consultants (UCLC) to conduct a study on how environmental taxes – specifically the Landfill Tax (LfT) – impact environmental outcomes.

The main objective of the Landfill Tax, which was first introduced on 1 October 1996, is encouraging diversion of waste from landfill to more sustainable options like recycling and recovery. The LfT has also been part of a broader shift towards decarbonisation, stronger waste & resource regulations and achieving a circular economy.

While literature suggests LfT has helped reduce landfill use, UK-specific empirical studies are limited, outdated, and mostly focus on Municipal Solid Waste (MSW).

The new study has focused on the following two stages:

• Phase 1: Developing a framework for evaluating environmental taxes.
• Outlining causal pathways showing how taxes can lead to environmental change.
• Providing practical guidance for both ex-ante (before implementation) and ex-post (after implementation) evaluations.
• Phase 2: Applying the framework to the Landfill Tax and exploring methods for evaluating the Climate Change Levy (however, the latter was not completed due to data limitations).

The study provides a proposed methodology for evaluating the impact of the LfT, and highlights data and methodological limitations; especially for broader waste streams and other taxes like the Climate Change Levy.

The study can be viewed here.

The executive summary can be found here.