The Taxing Problem of Plastic Feedstock and Recycling; Part 2

Governmental plans across Europe and North America towards single-use plastic bans and plastic packaging taxes are coming under close scrutiny. But will these initiatives really do anything to help the true scourge of plastic waste; ocean pollution?

This is the second half of a look into The Taxing Problem of Plastic Feedstock and Recycling; Part 1. Follow the link to read the first part.

According to a 2015 report published in the journal Science, “… the top six countries for ocean garbage are China, Indonesia, the Philippines, Vietnam, Sri Lanka and Thailand.” Although it also acknowledged that, “The United States contributes as much as 242 million pounds (110 million kilos) of plastic trash to the ocean every year.”

Here is the true tragedy, for even in India (which does not make the top six list) over 25,000 tonnes of plastic is generated every day, 40% of which is neither collected nor recycled. The result is that, according to the Bill & Melinda Gates Foundation funded International Centre for Tax and Development (ICTD), “… more than 550,000 tons (500 million kilos) of mismanaged plastic waste reaching the ocean every year, with drastic consequences for the environment and livelihoods. For example, the 5,000 fishermen from the town of Kollam in Kerala report catching more plastic than fish, and as part of a new project, have collected around 65 metric tons of plastic waste in less than a year.”

While the industry is beginning to take action where it is needed, as Reutersreported in August 2019, “The Alliance to End Plastic Waste (AEPW), a global alliance of plastic makers and consumer goods companies, said it would prioritize much of its $1 billion (£814 million) funds to curb plastic waste in Southeast Asia… pledging to invest half a billion more in within the next five years.” It is unclear how much impact even such a large investment can make in establishing a plastic waste collection and recycling stream for more than 3 billion people.  

This implies that the implementation of plastic recycling systems must be government driven. However, the ICTD report on the attempts by PM Narendra Modi’s government to reduce plastic waste by taxation have shown how complicated the matter can be.

The ICDT noting that, “At the state level, most governments have banned plastic bags, and four have banned single-use plastics. However, the bans have had mixed results. Variation between states on the types of products banned has caused confusion among consumers and retailers, while lack of buy-in from leaders and limited administrative capacity has led to weak and uneven enforcement. In some regions, the ban is openly defied, while in others, traders have gone on strike arguing that it unfairly affects small retailers.”

Meanwhile, in July 2017 the government implemented massive tax reform by the introduction of a Goods and Services tax, which included taxing plastic at a standard 18%. Not only did this fail to substantially increase the price of plastic, it caused confusion over the exemptions and different rates for certain plastic products and different types of plastic.

Furthermore, environmentalists and NGOs reported that the new tax was having a negative impact on plastic recycling, as “… it discouraged traders from buying recyclable plastic from ragpickers and scrap-sellers. [Meaning that] The income of informal ragpickers fell by about 40%.”

Other plans, such as the banning of single-use plastic (set for 2022) are still in the pipeline.

Simply taxing bad things, and subsidising good things is never as clear cut as the ‘man on the street’ or the politician at the hustings may claim. Both of these creatures believe that something must be done, but beyond refusing to use plastic straws in restaurants have little understanding of the complexity of the issue.

That said, plastics producers and manufacturers are aware of the sea change in opinion and are attempting to modify their practices.  

While the trend towards Reduce, Recycle, Reuse goes against the consumerist spirit of capitalism, and may well hurt the profits of both the plastics and chemicals companies, the linear economy of Make, Use, Dispose, Pollute, is simply not sustainable.

Unfortunately, solutions for guiding the plastic industry firmly into the circular economy are also not simple.

Photo credit: ICDT, Swachhindia, PlasticsToday, Sciencebusiness, Iconsdb, Oldcurrencyvalues, & Bostonmagazine.