Soaring landfill taxes in Britain are contributing to a record surge in fly-tipping incidents, according to a new report from the Institute for Economic Affairs (IEA). The report highlights that landfill levies have escalated from £7 per tonne in 1996 to £126.15 in 2025. However, in real terms, the revenues generated from these taxes have decreased by approximately half.
Fly-tipping incidents have reportedly risen by 31 percent since the 2018/19 period, reaching a record 1.26 million incidents in England during the 2024/25 fiscal year. The IEA contends that the increased taxation on the waste sector has proven counterproductive.
The report cites estimates from HMRC suggesting that the discrepancy between levied landfill taxes and actual revenues reached £240 million in 2024/5. It also points to a specific case in Oxfordshire where an estimated 21,000 tonnes of rubbish were dumped in a field, with a projected clean-up cost of £7.3 million.
Beyond landfill taxes, the IEA also attributes the growth of the black market in tobacco to high duties. The institute estimates that nearly one in three cigarettes smoked in Britain are now illegal, with tax revenues declining. While a portion of this decline is due to a 20 percent drop in adult smokers between 2021 and 2024, legal cigarette sales have fallen by 46 percent over the same timeframe. The number of smokers purchasing black market tobacco reportedly doubled between 2023 and 2025, with 32.3 percent of all cigarettes now being counterfeit.
Furthermore, predictions for alcohol duty revenue in the 2024/5 financial year did not materialize, with receipts falling to £12.4 billion in 2025/6, down from a forecast of £14.2 billion. The IEA states that the combined revenue from alcohol, tobacco, and landfill duties fell short of Office for Budget Responsibility (OBR) forecasts by £5.2 billion in 2024/5. Despite repeated tax increases, these duties generated £3.2 billion less than they did in 2021/2.
Christopher Snowdon, head of lifestyle economics at the IEA and the report's author, argues that there is a point at which increasing taxes becomes ineffective. He stated that excessive taxes not only result in billions in lost revenue for the Treasury but also create significant opportunities for criminal activity and make illegal waste disposal more appealing.
Ahead of the upcoming Budget, Snowdon suggested that the government should acknowledge that continually raising tax rates does not guarantee increased revenue. He referenced the OBR's own acknowledgment regarding cigarette duty, indicating that some taxes may have already reached their limit.