EU Said Moving Toward Plastic Waste Tax

Brexit causes €15 billion budget deficit

08.01.2020 -

EU member states are now said close to agreeing on implementing a general tax on non-recyclable plastic waste as one means of filling the €15 billion gap that will be left in the union’s budget when the UK – one of the biggest net contributors alongside Germany – departs. 

The countries are currently haggling over the terms of the European Commission’s budget rescue proposals, the London-based business newspaper Financial Time (FT) said, citing talks with senior EU officials.

Negotiations are expected to be even more protracted than usual, in view of the looming financial gap. The plastic tax proposal is said to be similarly controversial to Brussels’ separate plan to let profits from emissions trading (ETS) flow into the common budget rather than the coffers of the country that collects the tax, when the ETS scheme scheme is overhauled in mid-2021.

The waste tax, which could generate €42 billion over the course of the budget that runs from 2021 to 2027, would be the EU’s first common revenue since the establishment of the value added tax (VAT).

As part of its initial draft budget in 2018, the Commission proposed the levy on non-recyclable plastic waste, which sparked an accelerated drive toward reverse chemical recycling of plastics into their feedstocks.

Up to now, Brussels watchers note, member states have been reluctant to cede revenues to the common budget, placing them in opposition to the Commission and the European Parliament, though the widening post-Brexit funding gap is said to be weakening resistance.

According to the FT, Germany, the Netherlands, Sweden, Denmark and Austria have said they would accept the idea if the EU budget swallowed no more than 1% of each country’s gross national income. The Commission is pushing for 1.1 %, while the Parliament wants 1.3 %.

Next to the plastics levy, the Commission’s plan to divert profits from the EU’s cap-and-trade carbon emissions system (ETS) to the EU’s common budget is likely to be equally, if not more controversial, even if as reports suggest the profit transfer would not exceed 20% of the revenue, and poorer EU states would be eligible for a rebate.