ESA discusses proposed green tax on packaging

Members of the waste industry gathered in London yesterday (13 December), to discuss the Environmental Services Association’s (ESA) proposed green tax on packaging.

Outlined in the waste management trade association’s report ‘Beyond Landfill: using green taxes to incentivise the waste hierarchy’, the tax would be used to encourage recycling and recovery activities and penalise packaging that is not sourced from green materials.

According to the ESA, government should move away from landfill tax and look to other sources of taxation to stimulate investment in the ‘top end of the waste hierarchy’.

Matthew FarrowESA’s Director of Policy, Matthew Farrow said: “We believe landfill tax revenues may fall quickly in the coming years, making deficit reduction harder. At the same time, the environmental benefits of the tax will diminish as the focus moves further up the waste hierarchy. And the lack of clarity over the future of the tax post-2014 has created business uncertainty.

“In our report we show how the easy option of extending the landfill tax escalator beyond 2014 is the wrong option. Instead, we need some new thinking about how to promote investment further up the waste hierarchy. We propose a package of fiscal incentives and new taxes to do this.

“The landfill tax was right for its time, and has been a great success. But I hope our report will start a debate over how we can go beyond the landfill, tax and develop a green tax system that can help our sector meet the new challenges of making the waste hierarchy a reality.”

Recommended areas for taxation include:

  • A peat levy to help stimulate/support markets for compost;
  • A packaging levy alongside Packaging Recovery Notes (PRNs) to help encourage recycling and recovery of packaging ‘beyond Defra targets’;
  • Giving Enhanced Capital Allowances for investment in new sorting technologies to encourage innovative technology;
  • Giving Green Infrastructure Investment Allowances to encourage investment in new sustainable recovery facilities;
  • And introducing lower rates for Carbon Reduction Commitment (CRC) allowances for recycling and recovery activities to ‘avoid penalising green activities’ under the CRC.

The ESA estimates in its report that these measures could add up to £2 billion to GDP.

Julie Hill, Chair of Green Alliance’s Circular Economy Task Force and one of yesterday’s speakers at the Church House, Westminster seminar, told Resource: “[T]he discussion opened up some interesting possibilities for new fiscal instruments aimed at improving recycling, but needed to be more grounded in which specific materials are important to capture and why. This is the discussion that the Circular Economy Task Force is currently having.”

Tax is 'sledgehammer to crack a nut'

However, several members of the industry have said that though they believe more recycled packaging is needed, recycling should be driven by value rather than taxation.

Andy Doran, Senior Manager - Sustainability and Recycling Development at Novelis Recycling told Resource: "For me the proposal for a Packaging Tax is a sledgehammer to crack a nut.  It fails to recognise that in some materials there are effective mechanisms working alongside the PRN system. For example in metals packaging we have voluntary producer responsibility initiatives like Metalmatters and Every Can Counts being supported by the whole supply chain from raw material manufacturers and reprocessors through to packaging convertors and fillers.

"Sure, the current PRN system isn’t perfect but a rather blunt and blanket tax does not make up for those failings and could hinder current voluntary initiatives. I also think we should be careful what we wish for, since when has a new tax ever been effectively recycled back to support improvements in the area its recipients would like to see it spent....rather than being sucked into HM Treasury to meet wider deficit reduction targets."

Jane Bickerstaffe, Director of The Industry Council for Packaging and the Environment (Incpen) added: “We think this proposal is missing the whole point about why packaging is used. Its primary purpose is to prevent waste (of food and other goods). Recovering value from it after use is just a sensible way of reducing the overall impact of providing the public with all the stuff they need and want.” 

Sustainable waste management and anti-incineration group, United Kingdom Without Incineration Network (UKWIN) also called into focus the conspicuous absence of a call for incineration tax, saying: ‘[T]he Environmental Services Association (ESA) rightly says there is a need for more taxes to encourage management of waste at the top tiers of the waste hierarchy. However, the ESA unfairly dismisses an incineration tax as one of the means to achieve this.

‘As a trade body for incinerator operators and other companies that form part of the incineration industry it is perhaps unsurprising that the ESA wants to tax virtually everything other than incineration, but not incineration itself.’

UKWIN goes on to say however, that the ESA must ‘consider the prospect of an incineration tax to be serious’ as it would otherwise ‘not dare to mention it at all for fear of further shaking investor confidence’.

‘UKWIN views an incineration tax as a sensible measure to encourage the investment in collection, sorting, education and processing needed to recycle, compost and anaerobically digest suitable material, and to discourage the incineration of materials that would be reduced, re-used, recycled or anaerobically digested if the appropriate infrastructure were in place.’

Other speakers at yesterday’s event included Wendy Wagler, Head of Tax, Veolia Environnement UK Limited; and Jacob Hayler, Economist, ESA. The seminar was chaired by David Palmer-Jones, ESA Chairman and CEO of SITA UK.

Read the ESA’s ‘Beyond Landfill: using green taxes to incentivise the waste hierarchy’ report.