Unintended consequences of secondary legislation: A case study of the UK landfill tax (qualifying fines) order 2015

Increasing attention is being paid to the use of policy instruments in promoting progressive waste management and supporting the transition to a circular economy. To be effective in this context, instruments must be balanced, providing the correct amount of sanction and incentive to ensure environmental protection, enhance resource recovery, and promote innovation and investment in beneficial technologies. Focusing on the UK landfill tax, and adopting a stakeholder-oriented approach, this paper presents a case study illustrating how the ineffective implementation of secondary legislation can have unintended consequences on the aims of primary legislation. Specifically, it examines the Landfill Tax (Qualifying Fines) Order 2015 (QFO), which introduced a Loss On Ignition (LOI) test regime to classify fines for tax purposes. Results from a stakeholder survey (n = 44) revealed that the introduction of the QFO has dis-incentivised material recovery and discouraged investment in separation technologies, thereby creating a perverse incentive to landfill waste. Major weaknesses identified include the poorly defined LOI test regime, the timing of and responsibility for conducting LOI testing, the lack of compliance checks, and the marked discontinuity in tax rates at the somewhat arbitrary 10% LOI threshold. Furthermore, the system was widely viewed to be open to abuse by unscrupulous traders. A set of recommendations are made to address these shortcomings, where it is proposed that the LOI threshold should be replaced by multiple tax bands or a sliding scale and ideally combined with a direct incentive for investment such as an enhanced capital allowance for resource efficient technologies.