Taxes on plastic could be just the thing to help fill a Brexit-sized hole in the EU budget.
The bloc is hunting for new sources of revenue to fill the annual €13.9 billion budget gap created by the U.K.’s departure.
“We have too much packaging material and plastic waste, which pollutes our seas and oceans. So, the question arises, should we not tax the production of our plastics?” Budget Commissioner Günther Oettinger said last week in a speech on the bloc’s long-term budget. The suggestion comes just ahead of Tuesday’s unveiling of the Commission’s Plastics Strategy, which will lay out measures to cut plastic packaging and plastic waste. The proposal sounds like a natural fit with the Commission’s broader efforts to cut down on the ubiquitous material.
Countries are typically reluctant to have Brussels interfere with their tax policy. A failed 2011 effort to set up a bloc-wide carbon tax shows the depth of the national resistance.
That’s “the classic issue of who has control of the revenues,” said Jonathan Gaventa, a director of E3G, an environmental think tank. “I think there was fear from some member states of giving up control.”
A plastic tax may be viewed differently in national capitals because of Brexit, Gaventa said. “Given a choice between paying more from their national budget or enabling some degree of own resources [that directly feed the EU budget], at least some countries would support the latter.”
As Oettinger pointed out in his speech Wednesday, some countries already have such levies while others don’t, which endangers fragmenting the single market.
“In the internal market for goods, imports and exports in Europe, we need to have a common approach,” he said.
Even if countries agree, industry is unlikely to be on board.
“We do not believe that this would be reasonable,” said Karl-H. Foerster, executive director of PlasticsEurope, the industry group. “A new tax on plastics, plastic products or products containing plastics would be very complicated. In the end, the consumer would have to pay for it.” Rather, the Commission should press to ban recyclable plastics from landfills.
A plastic tax might prompt producers of plastic to ask: “Wait a minute, producers of aluminium or glass are not taxed for extracting and producing their raw material. Why should we be taxed for ours?” said Dominic Hogg, chairman of environmental and waste management consulting firm Eunomia.
“We should be cautious not to adopt the blanket view that plastic is bad,” Hogg said. “For example, for beverage containers — as long as littering is eliminated and recycling rates are very high, as under deposit refund schemes — it might be a reasonable choice.”
Authorities would also have to figure out where along the production chain a tax would be levied, or if it’s best to make users pay. “Should there be exemptions where plastic material is in the common interest, and is needed to meet sanitary rules? All this, we will start to check in the coming days,” Oettinger said.
The Commission is considering forcing countries to levy charges at point of sale for certain products like disposable coffee cups as part of the Plastics Strategy, copying a requirement already in place for plastic bags.
However, those fees stay with member countries; a plastic tax that puts revenues directly into EU coffers is a different matter.
Also to be sorted out: Would such a tax cover raw materials or final products, if it differentiates between plastics that are easily recyclable and those that aren’t? The tax would also have to be imposed on imports of plastics and plastic-packaged goods to even the playing field for EU-made products.
“There might be concerns that the [World Trade Organization] would look upon such taxes negatively,” Hogg said. “However, in principle, if the taxes are justified on environmental grounds and not applied in a manner that discriminates in favor of domestic production, such mechanisms should be fine.”
NGOs, too, are cautious about Oettinger’s idea.
“In principle we support the use of economic instruments to discourage plastic consumption, in particular single-use plastics,” said Delphine Lévi-Alvarès, coordinator for the Rethink Plastic NGO alliance. However “we are waiting to have more details on this proposal and its feasibility.”
Environmentalists see a possible conflict between the EU’s scramble for post-Brexit cash and green efforts to get rid of plastics altogether. If the taxes are seen as a way of making money, that could create a long-term clash if they also succeed in cutting plastic use — which over time will drop the tax take.
“The goal is to cut single-use plastic consumption,” Lévi-Alvarès said. “So if we are counting on revenues [from the tax], it can be contradictory with its environmental purpose.”
This article is part of POLITICO’s new Sustainability coverage, tracking issues including the circular economy, air and water pollution, nature protection and chemicals, and including the Sustainability Insights newsletter every Monday afternoon. Email firstname.lastname@example.org for more information.
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