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ACT Government considering a tax on something already funded by a tax

January 6th, 2015 at 03:57am

The ACT Government is considering implementing a “container deposit scheme” which would add 10 cents to the cost of drinks sold in recyclable containers such as plastic bottles or in cans. The idea is pretty simple: ten cents is added to the cost of the drink, and you (or anybody else) can redeem the ten cents if you return the container to a special recycling location…although The Canberra Times has a much more convoluted way of describing it which almost excludes the consumer from funding it and instead makes it sound like consumers profit from it:

ACT Environment Minister Simon Corbell says Canberra would probably follow NSW into a scheme that paid people 10 cents a pop to return cans and other drinks containers.

Container deposit schemes are industry funded – paid for through a levy on the cost of drinks – and have been strongly opposed by the big drinks manufacturers and by some states, with attempts to develop a national scheme failing.

(h/t Kirsten Lawson, The Canberra Times)

It pays people to return drink containers? Ummm, not quite…it returns the money which was already paid by the customer.

It’s industry funded? Well, if we ignore the consumer-funded levy for a moment, from an administrative standpoint that might be true as it costs money to administer such a scheme and if the entire ten cent levy is being returned to the customer when the container is returned, then the administration costs have to come from elsewhere, and obviously it will come from the drink manufacturers. It fits in well with the saying “a fine is a tax for doing something wrong, and a tax is a fine for doing something right”.

It could be argued that not everyone will return drink containers to the special recycling centres, and the levy from those containers could fund the administrative costs…but alas, as per the proposed NSW scheme which the ACT wants to follow:

Containers could also be recycled as usual in household recycling but in that case the council would redeem them and get the refund.

(h/t Kirsten Lawson, The Canberra Times)

ACT taxpayers (and NSW ratepayers for that matter) already pay for recycling services which handle such drink containers, so all this does is tax them a further ten cents per container for a service which they’re already paying, unless they choose to go out of their way by taking the drink containers to special locations in which case they get their ten cents back, but the drink manufacturers still have administrative costs which they will undoubtedly add to the cost of drinks.

This scheme is allegedly designed to improve recycling rates and reduce the amount of recyclable materials going to landfill, but there are two big problems with it.
1. The latest recycling statistics available from the ACT Government’s website suggest that 75% of recyclable materials are being recycled (as of 2010/2011, an increase of 4% of 2009/2010), and this rate is increasing year-on-year. The vast majority of people are already recycling such materials, and this scheme punishes them for “doing the right thing” unless they go out of their way to do so in specific locations.
2. Other items can still be recycled through standard domestic household recycling services at no extra cost, so even if 100% of drink containers are recycled through the new scheme, trucks will need to continue with their existing suburban runs to deal with other recyclables. When this is added to the number of individuals making trips to these new recycling locations with their drink bottles, and (in the case of NSW’s proposed “reverse vending machines” in public locations) the extra trips by trucks transporting the bottles from the “reverse vending machines” to the recycling depot, what we have is a much less efficient recycling scheme in terms of the number of vehicle trips required to deal with the transportation of recyclable materials.

These container deposit schemes made sense at a time when recycling schemes were new and an incentive such as “have your levy back” helped to educate people to recycle, but at a time when three quarters (and increasing) of recyclable material is being recycled, this is an inefficient scheme which places an unnecessary impost on drink manufacturers, and punishes people for doing what, up until now, governments have insisted is the right thing to do.


Entry Filed under: Canberra Stories,Samuel's Editorials

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  • 1. hopefulau  |  January 6th, 2015 at 9:35 am

    Dutch PET Scheme

    In March, the Netherlands Central Government (Rijksoverheid) announced that Joop Atsma, state secretary of infrastructure and environment (IM), had negotiated an agreement between the Dutch Association of Municipalities (VNG) and packaging producers that will eliminate long-standing deposits on PET bottles.

    They only recycle about 42%.

  • 2. Samuel  |  January 6th, 2015 at 9:54 am

    That’s fantastic! From the article I gather the main reason for scrapping the scheme is that Holland has more cost-effective ways of dealing with recycling, including producing electricity.

    We could learn some things from the Dutch.

  • 3. hopefulau  |  January 6th, 2015 at 9:56 am

    Sure could – especially on the wages front.


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