The Plastic Tax

Complex arguments face EU proposals to put a new tax on the manufacture of plastics, mooted by EU Commissioner Günther Oettinger. The proposed Plastics Strategy revealed last month would see a levy placed on the production of plastics, with a dual aim of cutting waste and replenishing EU coffers.

The European Commission is facing an annual loss of €13.9 billion as a result of the UK's vote to leave the EU at the referendum of 23rd June 2016. Delivering a speech on the EU's long-term budget, Mr Oettinger said measures to cut plastic waste would be discussed, although no estimate of how much the tax could rise was given.

According to the environmental body, EcoWatch, the most common items polluting our oceans are carelessly discarded food and drinks containers and plastic bags. The UK already introduced a levy on plastic bags in supermarkets in 2015, when customers began paying 5p per bag. The measure was aimed at cutting waste - the money is donated to charity.

Mr Oettinger's proposal seems to be more focused on putting money into the EU coffers. The EU executive is to discuss whether the new tax would be levied at the plastic production or disposal stage and whether exemptions should be considered for plastic used for hygiene and safety reasons.

His speech has led to industry insiders and even environmental groups expressing their concerns. The many plastics manufacturers who already adhere to responsible practices, using recycled materials in the manufacture of plastic goods, are concerned about the blanket measures.

They have voiced fears that the blanket tax will penalise even those who already operate responsibly, adding extra costs to the production process. Invariably, these would end up being passed on to the consumer to keep the business viable.

Dominic Hogg, chairman of the waste management and environmental consultancy, Eunomia, felt plastic was being unfairly singled out by the tax, when other production processes were also damaging to the environment.

He urged caution in adopting a blanket view that plastic was bad, suggesting manufacturers may rally against paying a new tax, when aluminium and glass producers weren't charged for extracting the raw materials.

Mr Hogg suggested a better measure would be to expand deposit refund schemes on plastic items that were causing the most litter, such as beverage containers. He said improving recycling rates and eliminating litter might be a more "reasonable" choice.

However, Mr Oettinger pointed out some countries already had plastic taxes, but others didn't - a discrepancy that could lead to a fragmentation of the single market. He is calling for a "common approach" for the European internal market and for imports and exports.

Another significant factor is countries' reluctance to allow Brussels to interfere with their taxes. The strength of feeling against any intervention was proven in 2011, when the EU failed to implement a Europe-wide carbon tax.

Jonathan Gaventa, director of environmental think tank E3G, describes this is a "classic issue" of discord over who controls the revenues, with some member states afraid of giving up control.

Karl H Foerster, executive director of the industry group, Plastics Europe, said it would be very complicated to implement any new blanket tax on plastics, warning that the consumer would end up paying for it in the end.

Instead, he suggested the European Commission would be better employed introducing new legislation to ban recyclable plastics from landfill sites, and to ensure that they were properly recycled instead.

Concerns about Oettinger’s idea have also been expressed by NGOs, such as Delphine Lévi-Alvarès, co-ordinator of Rethink Plastic. Although the alliance supports, in principle, measures to reduce single-use plastics, it fears a conflict between the EU's aim of generating cash and the environmentalists' goal of reducing plastic use.

Lévi-Alvarès explained it could result in a clash of interests in the long term, because if the initiative succeeded in reducing plastic use, this would cut the amount of tax it brought in. Rethink Plastic is waiting for more information on the feasibility of the proposal, before deciding whether to officially support it.

The EU is considering introducing a charge at the point of sale for items such as plastic single-use coffee cups, in the same way as there's a 5p charge for plastic bags at the supermarket.

Other issues to sort out include whether the tax would cover the raw materials, or the final product - and whether it would differentiate between the production of recycled and non-recycled plastic.

Discussing Britain's planned Brexit, Prime Minister Theresa May said last month she wanted the UK to be a "force for good" and that she would support measures to protect our environment. She said she wished to improve Britain's recycling rates and reduce the amount of plastic in circulation.

The government has already announced new proposals, such as extending the 5p plastic bag charge to small retail shops, as well as larger stores, and holding a consultation exercise on adding a similar charge or tax on one-use plastic products, including containers for takeaway food.

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