Belgian Prime Minister Guy Verhofstadt used the October 17 speech at which he presented the country's 2007 Budget to give details of a potentially controversial new tax on packaging which would penalise in Belgium those materials whose production is reckoned to generate the highest carbon emissions.
The measure, proposed for introduction from July 1 next year, would see a basic tax of €0.35/kg imposed on all packaging materials, which would then be multiplied by a material-specific coefficient the Belgian authorities say reflects the amount of carbon generated by that material's production. The proposed co-efficients are 0 for paper, 1 for glass, 5 for steel, 7 for polystyrene and PVC and 18 for aluminium, meaning a new surtax of €6.3 would be payable per kg of aluminium packaging produced, compared with €0.35 per kg of glass. It is estimated the tax would bring in around €300m.
In announcing the proposal, Verhofstadt said: “We can prevent disasters of climate change. But new instruments are needed. That is the reason we are introducing a new tax on packaging that does not respect the climate. The tax will be subordinated to the CO2 assessment of the packaging. So, for example, paper packaging will not be taxed.”
While applauding the Belgian government's “recognition of the carbon neutrality of paper,” and its “commitment to the environment”, FEFCO (the European Federation of Corrugated Board Manufacturers) said it “does not view an additional tax on packaging as the appropriate instrument”.
Wim Hoebert, secretary-general, said: “We do not favour indiscriminate taxation on packaging, which is already taxed to the hilt. Nor is it clear who will pick up the bill, although it seems likely it will be consumers. We await more details, although the tax in some form now looks certain.”
Hoebert added that the announcement “merely further emphasises the impracticality and unworkable nature” of the Waste Framework Directive currently under discussion by the EC and due to be voted on in November by the European Parliament. Following the Commission's proposal for a “waste hierarchy” that maintains the existing three hierarchy levels: prevention, reuse or recycling and disposal (which FEFCO favours), the Parliament's Environment Committee has instead suggested a 5-step alternative (Packaging Today - October 2007): prevention, reuse, recycling, other recovery options, and disposal.
Hoebert says: “Such a hierarchy would favour reuse over recycling even when it does not make environmental sense.”
Anne Nachtergaele, deputy director, environmental affairs at the Belgian food manufacturers' trade federation FEVIA, says: “Generally Belgian food manufacturers, who we believe would pay the tax initially, are horrified; the proposed taxation rates are way too high and would badly hit such companies' ability to compete. We estimate the tax would add up to some 2% of the entire Belgian food sector's turnover. “However,” she adds, “the proposal is some way from law; the legislation must still be written and submitted to the European Commission before there is any chance of it passing into Belgian law.”
Jane Bickerstaffe, director of UK body Incpen (The Industry Council for Packaging and the Environment) believes it will be packer-fillers that pick up any additional tax burden, adding: “This is yet another example of a government picking on packaging. It would be much fairer if the Belgian government had decided to put a tax on the production of all goods to make up its budget deficit. Belgium, in fact, produces very little packaging, which may explain why it has been singled out.
“Drinks containers will not be subject to the tax because they already carry an eco-tax, which has encouraged Belgians to buy their drinks elsewhere,” she adds. “So this tax is very likely to encourage more cross-border shopping for all groceries. The carbon impact of these journeys could be significantly higher than any possible benefit from reduced packaging use.”
Julian Carroll, md of Incpen's European counterpart Europen, adds: “”If the Belgian Government is serious about cutting carbon emissions then why just look at packaging materials? This is just a revenue-boosting exercise to fill a hole in the country's budget deficit with no sound environmental basis.
“I think it's unlikely we'll see this tax introduced in the near future, and certainly not by July 1. If any legislation that needs drafting incorporates technical rather than purely fiscal components the text will need to go before the European Commission before progressing further, plus be subject to additional consultation among other Member States.”
Maarten Labberton, director of the packaging group at the European Aluminium Association, says, however, that the threat of the tax is “very real". “The material-specific tax, with the various co-efficients proposed, is very similar to one already in force in Denmark, and I think we could well see it introduced quickly unless there is concerted opposition, ” he explains. “The EAA sees very no environmental justification whatsoever for it and is supporting the advertisements being put in Belgian newspapers by a consortium of retailers, brand owners and packer-fillers strongly opposing the move. Belgium already has an effective packaging waste collection system, FOST Plus, and, furthermore, the country has recently achieved (for 2005) the highest ever-recorded rates of steel and aluminium recycling, of 86%. If this proposal becomes law it seems likely packer-fillers will feel the effects first, with the additional costs passed on, inevitably, to consumers.”
