Say hello! to the new EU tax on plastic
“ In this world nothing can be said to be certain, except death and taxes”
— B. Franklin
As of 1 January 2021, the EU kicked off a new tax on non-recyclable plastic packaging waste.
This tax is based on the “polluter pays principle” which simply means that if you pollute the environment with virgin plastic, you have to compensate for it, therefore you pay for it. In practice every EU Member State has to pay monthly contributions to the EU budget for every kilogram of plastic packaging waste that is not recycled and placed on the market. The rate is €0.80 per kilogram of non-recycled plastic packaging waste and it is up to the Member States to decide on how they can finance this levy, whether by directly taxing the plastics sector, or through other methods of taxation.
Even though there is an adjustment mechanism to avoid excessive contributions from less wealthy Member States, there is no option to avoid paying this tax. This levy has a retroactive effect, meaning that even if a Member State has not implemented national rules before the beginning of 2021, the levy is still calculated automatically starting from 1 January 2021.
According to the EU circular economy action plan, we need a systemic change in order to stop plastic pollution. Plastic shall be reduced, reused and recycled. Simple as that.
Plastic tax is therefore a call for mobilization. Mobilization in reducing the overall level of plastic consumption and plastic waste in the EU and incentive to foster recycling and boost the circular economy. Because if we do not do anything, by 2050 we will have more plastic in the ocean than fish. And without fish in the ocean, the human kind will not survive, scary but true.
The EU sets the goal to ensure that all plastic packaging is recyclable by 2030. In 2018 less than 50 % of plastic packaging was recycled in the EU according to Eurostat, so there is still a long way to go. That is another incentive for plastic tax.
We have to remember that plastic pollution cannot be stopped without putting less plastic into the market in the first place. Producers shall rethink their business models by switching from the virgin plastic packaging to the recycled-plastic in order to fulfill requirements set by the EU. And here comes the Empower Platform. It connects collectors of plastic, recyclers and brands and is a tool to provide the companies with recycled plastic. The Empower Platform also provides a scalable and easy to deploy foundation for an Extended Producer Responsibility scheme: easy digital deposit system, traceability throughout the supply chain, immutable data about the waste journey and simply reporting for every producer.
Plastic tax is a new source of revenue to the 2021–2027 EU budget and around €6 billion per year is expected to flow into the EU’s budget from this levy. What is interesting, the revenues from plastic tax will go to the EU’s Covid-19 recovery fund. So by paying plastic tax we are on one side protecting our environment from plastic pollution and on the other providing financial help to the businesses most affected by the coronavirus pandemic.
Win-win!
Written by Olga Matuszczyk, Empower Legal Intern
