A 700% increase in the landfill tax between 1998 and 2014 has incentivised more illegal disposal of waste.
A new report by the National Audit Office (NAO) suggests that although the change in the levy by HM Treasury resulted in a 65% fall in total waste to landfill over the period, it triggered an increase in fly-tipping.
It is also revealed the misclassification of waste at authorised landfill sites and waste disposed at unauthorised sites reduced Landfill Tax revenue by around £275 million a year.
The spending watchdog has found that HMRC only has limited insight into the environmental impact of taxes.
Gareth Davies, Head of the NAO, said: “Taxes are one of the tools available to the government in pursuing its ambitious environmental goals. While there is some evidence of the positive impact that taxes can have on the environment, too little is known about their effect.
“HMRC and HM Treasury should work closely with other departments to ensure that existing and future tax measures are compatible with the wider environmental strategies being developed across government. HM Treasury’s review of how the transition to net zero will be funded is an important first step in this process.”
ELN has contacted HM Treasury for a response.