EU to introduce plastic waste tax

The European Union is introducing a tax on non-recycled plastic packaging from 1 January 2021. The tax will be paid by member states into the EU’s general budget.

The levy is one of the measures to finance the COVID-19 recovery package of EUR 750 billion.

“As a first step, a new own resource will be introduced and apply as of January 1, 2021, composed of a share of revenues from a national contribution calculated on the weight of non-recycled plastic packaging waste with a call rate of EUR 0.80 per kilogram with a mechanism to avoid excessively regressive impact on national contributions,” the conclusions adopted by the European Council reads.

Besides the plastics tax, the EU plans to introduce a levy on goods imported from countries with emissions that are higher than an EU benchmark or the so-called carbon border tax.

National contributions will be calculated by the European Commission using existing reporting obligations under the Packaging Waste Directive. Under that directive, member states provide data on plastic packaging and recycling.

There are questions on how tax will be calculated, how it will be passed through the supply chain

Mark Victory, Senior Editor at ICIS, said there are questions on how the tax will be calculated, how it will be passed through the supply chain, and whether it would lead to greater regulatory divergence on plastics.

Individual countries are free to adopt different approaches

The charge is not a tax, although commonly referred to as one, because it is payable at state level rather than by individuals or corporations, Victory writes in an insight on the new levy.

The methods used to meet the cost of the charge will be up to individual countries, and the EU Council has not proposed any regulatory stipulations around this. Individual countries are free to adopt different approaches and could seek to recoup the cost of meeting the charge from differing parts of the supply chain, leading to potential regulatory divergence.