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MPs call for lower VAT on recycled products


Parliament’s Environmental Audit Committee has said that there should be lower VAT on recycled goods in a new report on the circular economy.

In the report, ­Circular economy: ending the throwaway society, MPs also said that there should be longer warranty periods for consumer goods and a ban on food waste being sent to landfill.

The report recommends that the Government should take steps to reform taxation and producer responsibility regulations to reward companies that design greener products.

It suggests that differential VAT rates should be introduced based on the environmental impact or recycled content of products. Tax breaks should also be considered for businesses that repair goods or promote reuse, it recommends.

Environmental Audit Committee chair Joan Walley MP (pictured) said: “We had throwaway economics in the past, but that disposable society simply isn’t sustainable in the twenty-first century. Less than half of all the stuff we throw away each year is recycled and turned back into something useful, despite prices for raw materials rising across the world.

“Global food prices have roughly doubled since the beginning of the century, metal prices have trebled, and energy prices have quadrupled. These trends look likely to continue as emerging economies expand and the world population grows to 9 billion by 2050.

“Unless we rethink the way we run our economy and do business in a different way, environmental problems like climate change will get worse and the cost of living and doing business in the UK could continue to rise.

“The good news is that with the right Government support we can stimulate UK manufacturing, create jobs, grow our GDP and reduce our environmental footprint. We have to create a more circular economy that rewards innovative businesses, values natural capital, and is resilient in the face of global resource prices.”

The Environmental Audit Committee heard from businesses such as Marks & Spencer and B&Q that explained the circular economy made economic as well as environmental sense.

Businesses also wanted to see more standardised recycling across England to make it easier for companies to access vital materials.

While the Committee also wants the Government to support EU proposals to increase recycling rates to 70 per cent by 2030.