Inefficiency in the waste incineration tax

The Swedish Tax Agency submits the report “Evaluation of the waste incineration tax” to the Ministry of Finance on 1 October. The conclusion is that the tax does not steer effectively towards the goals that justify the tax.

Even though the cost of the tax has been transferred to households and companies, these actors have difficulty reacting to the tax price signal, therefore the source sorting has not increased. The effect of the tax on material recycling has become negligible, says Charlotte Berg, project manager at the Swedish Tax Agency.

One explanation for the tax not affecting the recycling of materials is that there are already other instruments in the waste area. For example, just over a third of the municipalities have introduced multi-compartment bins or different-colored bags for optical sorting as part of adapting the handling of waste to future requirements. With such a waste management system, the tax is superfluous because it does not affect the amount of waste that is sorted at source.

One-fifth of the cogeneration and heating plants state that they have revised their investment plans as a result of the tax, despite the fact that they have been able to overturn the tax on the Swedish reception fees.

In the long run, it thus seems as if the companies judge that they cannot transfer the tax on the reception fees to a sufficient extent. The development for waste-based cogeneration and heating plants also depends on the price development within the EU’s emissions trading system and the extent to which combustion capacity is expanded in Europe, says Eva Samakovlis, head of analysis at the Swedish Tax Agency.

The Swedish Tax Agency’s evaluation also shows that the tax will probably not facilitate the transition to a circular economy as neither waste flows, material recycling, product design or greenhouse gases are expected to be affected to any great extent in the longer term.

The waste incineration tax was introduced in April 2020 and is levied for every tonne of waste that is brought into a waste incineration or co-incineration plant. The purpose of the tax is to increase material recycling and reduce greenhouse gas emissions.



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