The plastic levy, often wrongly called a plastic tax, is a fact!
Our flustix blog author Elisabeth Fritsch examines the EU regulation and looks at what is coming, for whom, and at what is being praised or criticised: who pays, who wins, who loses?
First of all:
The plastic levy came into force on 1 January this year. The name is a little misleading, because contrary to many reports this is NOT a tax.
What is the “plastic levy” and how is it calculated?
The plastic levy relates to all non-recyclable plastic waste that is placed on the market – and therefore generally arises – in the individual EU member states. For every kilogram of non-recyclable plastic, 80 cents are to be paid to the EU. „The estimated level of the German own-resources contribution is derived from the quantities of plastic packaging waste arising in Germany that were reported to the European Commission, and from the quantities sent for recycling in 2018. On that basis, a contribution of around EUR 1.4 billion is to be expected for Germany in 2021.“ That was the German federal government’s response to the minor interpellation tabled by members of parliament Dr Bettina Hoffmann, Steffi Lemke, Lisa Badum, further members and the BÜNDNIS 90/DIE GRÜNEN parliamentary group.
Which money goes to whom?
In future the plastic levy will form part of the membership contributions all EU states pay to finance the EU budget. “In principle, a nation state’s contribution is based on its economic strength. From 2021, a small part of these membership contributions will be calculated on the basis of national recycling volumes for plastic products,” the German Federal Environment Ministry told flustix when asked. Accordingly, countries that recycle little (for example plastic packaging waste) would pay more. Countries that demonstrably recover a great deal and thus keep it in the loop pay less. IMPORTANT: exported waste is no longer to be regarded or accepted as recycled.
Who ultimately bears the cost?
In the first instance the member states themselves. How, and whether, the costs are then passed on within each country is for each EU state to decide. In Germany the matter currently lies with the Finance Ministry for consideration, and the ministry states that “at present the federal government is not planning any separate apportionment of the budget expenditure for the EU plastic levy”. In other words: for the time being nobody intends to pass the costs on to business or to consumers.
What is the plastic levy good for?
The aim of the plastic levy is, on the one hand, to reduce the volume of new/virgin plastics and of low-grade, poorly recyclable plastics, and on the other to promote a functioning circular economy in every EU member state – and those are still at very different levels across the EU. It also encourages products to be designed for circularity. The German Advisory Council on the Environment (SRU), which supports the plastic levy as a way of strengthening the circular economy, additionally recommends in an open letter: “One important approach would be to increase the competitiveness of recyclates compared with primary raw materials. This can be supported by dismantling subsidies: the energy tax exemption for fossil fuels that are not used for heating or as motor fuels should be phased out. Additional taxation of primary raw materials for plastic production should be considered.”
Criticism, praise and effects of the plastic levy:
Who ends up footing the bill – will the state take it on entirely, or pass it on in future to business and hence to consumers? Not for now, but in the long term it remains an open question. Companies are already battered enough by the crisis and should not be burdened further, government circles say. In practice such state levies and costs are not seldom passed on to business, which then has to add them to product prices. If manufacturers were to pass the levy on to consumers through the product price, questionable products would become more expensive. One advantage could be that price increases prompt consumers to switch to more environmentally friendly alternatives, so that supply and demand together promote more sustainable consumption. Because sustainability does not have to be more expensive per se.
What matters now?
The use of already recycled plastics as well as of recyclable material has to be taken into account and encouraged, as the German Packaging Act – in force since 2019 but not yet fully implemented – also provides for.
The SRU sees it the same way: “The federal government should work to ensure that product regulation is consistently aligned with recyclability requirements, for example in the sustainable products initiative and in the projects to reduce packaging waste. A common basis for assessment is needed in order to compare packaging ecologically on the basis of objective criteria and uniform system boundaries.”
That calls for independent certification, not for unverified advertising promises on packaging. The shift is only possible with consumer trust. flustix offers genuinely independent, internationally recognised certifications and consumer seals for recycled and recyclable products and packaging.
What is your view on this? Is a plastic levy the right way forward, what can be achieved with it and who ends up paying the bill?
Let us know what you think.