Tax on waste disposal

Olga Nikitina, Kommersant, 02.10.2017

The Ministry of Industry and Trade has proposed as early as 2018 to introduce the duty of the complete disposal of a number of goods and their packaging for producers. The department has sent a letter about this to the Ministry of Natural Resources, where it will be considered together with business, it has been promised: in case of failure to comply with the standards, entrepreneurs will be obliged to pay an environmental tax. The market participants interviewed by Kommersant, warn that the initiative will fail the industry reform, while additional quasi-tax load will come upon consumer goods (refrigerators, lighting equipment, tyres, paper, and plastic products). This could provoke a rise in prices, if the government would believe in the need for such measures but there is no information about it.

The Ministry of Industry and Trade proposes to raise the standards of recycling for a number of goods and their packaging up to 100%, as said in the Ministrys letter to the Ministry of Natural Resources (available in Kommersant). In order to stimulate full-fledged recycling, as early as 2018, it is proposed to introduce complete disposal of household non-electric appliances, lighting equipment, and a year later paper, cardboard and products made of them, as well as tyres and plastic products. In 2021, according to the idea of the Ministry of Industry and Trade, the demand for 100% recycling should become applicable for computer equipment, electronic household appliances, accumulators, and industrial refrigeration and ventilation equipment. Also, the department proposes to expand the list of goods subject to the mandatory disposal by including aircraft tyres and primary battery cells into it.

We would like to remind, the very responsibility of producers and importers to recycle waste products and packaging or pay the environmental tax has been in effect since 2017, but according to the current legislation, the standards should be increased gradually.

However, in June, at a meeting of the president with the government members, the Ministry of Natural Resources asked Vladimir Putin to instruct the government to consider the possibility of raising the standards for recycling and expanding the list of goods and packaging subject to recycling in order to increase revenues from the environmental tax from 6.5 billion to 30 billion rubbles annually. Vladimir Putin instructed the White House to prepare the relevant regulatory and legal acts before the 1st of November.

 The 100% standard of recycling from 2018 is not just a financial collapse of the consumer goods market, but also an flagrant mockery of the basic principle of implementing the manufacturers extended responsibility self-recycling, according to Lyubov Melanevskaya from the Association Industry for Ecology (RusPEK). As she says, the Ministry of Industry and Trade proposes to de facto introduce a tax on the entire volume of consumer goods and packaging.

Tyre manufacturers also insist: under such conditions, the environmental charge will be a new tax, and the attempt to reform the industry will fail. In opinion of Nadezhda Churmeeva from the Tyre Manufacturers Association, A 100% standard of recycling tyres from 2019 is an obviously unachievable goal for independent exercise of responsibility. During this time, it will not be possible to either build a system for collecting worn-out tyres from individual persons, or to solve sale problems refined goods, and in Russia there are not enough waste disposal capacities for this in fact this will put a brake on independent execution of the extended responsibility.

Anton Guskov from the Association of Trading Companies and Manufacturers of Electrical and Computer Equipment (RATEK) draws attention to the fact that in Russia there is no infrastructure for separate collection of electronic waste and no one is going to create it. Instead, the Ministry of Industry and Trade wants to increase the cost of household appliances for the population, he complains. So, refrigerators can rise in price for 1.8 thousand roubles (based on the standard of 26 thousand roubles per ton and average weight 70 kg). There is no demand for 100% recycling even in Europe, where a collection system has long been, says Mr. Guskov. In world practice recycling of goods is a question of generated garbage, and the standard is calculated from its volume, while we talk about the product released to the market, that is, the eco-tax becomes a turnover tax, he adds. In Russia, people do not throw out large household appliances for decades its unclear where to take the garbage to recycle it.

As it was told to Kommersant the Ministry of Natural Resources had not yet received a letter from the Ministry of Industry and Trade. All proposals will be considered jointly with business representatives, the department promised. It should be noted that the government traditionally is very careful about any eco-charges, and there is no evidence that changes have been discussed and approved at this level.