BAA fury over stone tax snub by European Court

Aggregates Levy deemed not to be state aid and to be environmentally justified.

The British Aggregates Association (BAA) has reacted angrily to the decision by the European Court of First Instance to dismiss its legal challenge to the Aggregates Levy.

The association failed in its claim that the levy - and the exemptions under it for certain aggregates products - constituted state aid. The court said the environmental remit of the tax justified the exemptions.

"Accordingly, the United Kingdom was free to determine, as part of its environmental policy, the minerals used as aggregates that it considered appropriate to tax and to exempt certain other materials," the court added.

But the BAA dismissed the decision. "When a tax is called an environmental tax, all control goes out of the window," said BAA director Robert Durward. "What's more, the government is entirely hypocritical to call this an environmental tax. They say the aim was to reduce the consumption of virgin aggregates by 10%, but the opposite is happening."

"The decision means continuing the nonsense of adjacent quarries producing virgin aggregate where one pays the £1.60/t tax and the other does not," he added. "However, we will continue to campaign to have the levy removed as it is not only bad for the environment but is highly discriminatory."

Durward also warned that a dangerous precedent had been set for the imposition of arbitrary taxation. "It's not difficult to visualise other taxes on the pretext of environmental protection. Everything has some impact on the environment."

The Quarry Products Association (QPA), although not having supported the BAA's legal case, reiterated its opposition to the levy. "There remains a profound lack of evidence for its claimed green benefit, with environmental performance improving across the industry in spite of the levy, rather than because of it," said QPA director general Simon van der Byl.

The BAA has two months in which to appeal. "It is encouraging that the whole industry is now more united than ever against this tax. This is a direct result of the BAA's single-minded determination not to let the matter rest." said Durward.

[Contract Journal, 20 September 2006, p 11]