Government ministers have been cautioned that a proposed tax on the cleanup of waterways could jeopardize crucial industrial projects and lead to job losses.
The Treasury is considering implementing a landfill tax on “stabilizers” utilized for decontaminating ports, rivers, and canals when they undergo dredging starting from April next year. However, a recent analysis suggests that this move could significantly inflate project costs, posing a major challenge to coastal communities.
Concerns have been raised by Labour MPs about the potential impacts of the tax, with the British Ports Association (BPA) warning that it could impede the cleanup of polluted waterways and escalate flood risks.
According to research conducted by Oxera, the expenses of capital projects could escalate to a level where certain projects become financially unfeasible. The maritime sector in the UK, which sustains numerous jobs and contributes billions to the economy, could be severely affected by this tax, particularly in coastal and regional economies.
The BPA has urged Dan Tomlinson, the exchequer secretary to the Treasury, to reconsider the tax proposal. A spokesperson emphasized the adverse impacts on jobs and critical projects, urging the government to abandon the tax to safeguard investments in the country’s ports.
In their manifesto before the general election, Labour pledged to make direct investments in ports, aligning with their Green Prosperity Plan of April 2024, which aimed to allocate £1.8 billion for unlocking private investments.
In response, a Treasury spokesperson defended the tax proposal, highlighting the need to address hazardous waste disposal issues. They reassured that only a minimal fraction of dredged material in England undergoes landfilling with stabilizers and that alternative, environmentally friendly methods are available. The reforms are set to take effect in a year, providing businesses with ample time to adjust.
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