EU’s New Plastic Tax May Do More Harm than Good

The European plastics and food and beverage industries have raised concerns that the EU tax funds will not be reinvested in waste management and recycling infrastructure and potentially endanger the Single Market and EU’s COVID-19 recovery plans.

The European Council has approved the implementation of a plastic tax starting January 1, 2021, as part of its latest agreement on the new Multiannual Financial Framework (MFF) (2021-2027) and coronavirus recovery fund. The plan foresees a EUR0.80/kg levy on non-recycled plastic packaging waste, which will be paid by Member States into the EU budget.

While the European Commission has presented the tax as a “contribution to the EU budget designed to incentivize Member States to increase recycling from plastic waste,” European Plastics Converters (EuPC), the Brussels-based EU-level Trade Association representative of the European plastics industry, warns that it might have “the opposite effect.” Further fiscal measures are “not the most efficient tool to drive innovation and investments needed to meet the Green Deal’s intended policy objectives,” EuPC says.

“As the revenues of the EU plastic tax are not earmarked to be invested into the waste and recycling infrastructure, it will not increase the recycling of plastic waste in Europe,” stresses Alexandre Dangis, EuPC managing director. “Instead, it will further increase the cost of plastic recycling and encourage the shift to other packaging materials with a bigger environmental impact. To truly increase recycling rates across Europe and protect the environment, taxation of the landfilling of plastic packaging waste would be more efficient.”

The urgency of plastic pollution reduction measures cannot be overstated, according to EuPC. On the current trajectory, annual flows of plastic into the ocean could nearly triple by 2040, equating to 29 million metric tons of plastic leakage into the oceans at the cost of USD100bn to the global economy. This is according to a groundbreaking report by The Pew Charitable Trusts and SYSTEMIQ, which employed a comprehensive plastic system modeling tool to create a global analysis that evaluates various strategies to reduce ocean plastic flows and quantifies the associated economic, environmental and social implications of each pathway.

As a next step, further details on the tax will have to be worked out in a specific law and approved by the European Parliament and Council of the EU. While much of the details remain obscure up to now, according to EuPC, it is already clear that the Member States will have substantial freedom to implement the measures to collect the funds.

“The implementation and complexity of different schemes from country to country will lead to a host of heterogeneous measures, destroying the single market,” EuPC adds.

Before the EU leaders’ budget meeting in Brussels on July 17-18, over 40 organizations from the packaging supply chain wrote a letter to voice concerns over the proposed inclusion of a plastic tax and significant under-investment in waste packaging infrastructure. The signatories echoed concerns that funds raised from the tax would be absorbed by the COVID-19 economic recovery pot rather than reinvested in critical waste management infrastructure and recycling technologies.