Eco-tax brings chaos and confusion

The extension of the eco-contribution to several new products yesterday brought chaos and confusion as retailers and manufacturers were stunned by the magnitude of the tax, especially on plastic bags.

A plastic bag that cost manufacturers 3m to produce was effectively slapped with an eco-contribution of 5c2.

The eco-contribution was announced in the last budget and came into force on January 1 through a legal notice published on December 31.

The president of the Federation of Industry, Anton Borg, argued that the tax was disproportionate with the cost of the items and was putting jobs at risk. Large companies have calculated costs would rise by hundreds of thousands of liri as a result.

"Eco-contribution on a plastic bag increased by 1,730 per cent. The FOI has requested an urgent meeting with the government about the matter," Mr Borg said.

Contacted later, Mr Borg said the government took a note of the issues of concern to the FOI and promised to look into them and give a reply later this week.

Richard Pace Bonello, of Inserv, a company that distributes disposable items to shops and which employs 25 people, said that while a packet containing 1,000 plastic bags used to cost about Lm3.50 with eco-contribution the price shot up to about Lm70.

"A bag that used to cost about 3m will now cost about 7c," he said.

An eco-contribution is now payable on a number of items ranging from bottles, cans and containers of beverages, liquid soap, perfumes, plastic kitchenware, chewing gum, cartridges, mattresses, tyres, batteries and lubricating oil to air conditioners, TV sets, water heaters, mobile phones, calculators as well as toners and ink cartridges.

Eco-contribution on plastic bags is set at Lm10.67 per kilo while those that are bio-degradable have a tax of Lm5 per kilo. Shotgun cartridges have a tax of 2c each, irrespective of whether they are full or empty. Eco-contribution on mobile phones and phones amounts to Lm2.50. Dishwashers have a Lm10 eco-tax, water heaters Lm3 and air conditioning units have a tax of Lm12. Eco-tax on refrigerators is set at Lm10.

Mr Pace Bonello said polystyrene containers used by fast food outlets that used to cost Lm13 to Lm15 per 1,000, will now have to sell for Lm63 per 1,000.

Contacted yesterday WasteServ's strategy and development executive Chris Ciantar said eco-contributions were aimed at changing people's habits where disposal of waste was concerned.

"If one looks at plastic bags, about 52 million are put on the market yearly. They are indestructible and because most end up filled up with domestic rubbish they occupy a large volume because air gets trapped inside them and one requires a substantial investment to have a compactor to be able to burst and crush them.

"Small bags, such as those used for bread, are exempt and people should start using smaller bags if they do not want to pay the eco-contribution. As we want to encourage the use of thinner bags, eco-contributions are based on weight and hence the penalties increase with thickness of bags. Eco-tax on bio-degradable plastic is half that on other plastic, so it is not as if there are no alternatives.

"But we want to change the mentality of both producers and consumers. Some supermarkets had introduced cloth bags before eco-contribution came into being. Because bags now have a value, people will re-use them or fill them up to the brim when thrown away, hence fewer of them will be disposed of," Dr Ciantar said.

GRTU director general Vince Farrugia complained that the government was saying one thing but doing the opposite. "Eco-contribution has been introduced on a range of new products and people do not know how it works. The measure is just another fiscal one.

"Eco-contribution has been introduced on electronic goods while the government had negotiated with the EU to postpone implementation on the directive on electronic and electrical equipment waste till December 2008. This simply does not make any sense at all," Mr Farrugia said.

He argues that a small shop and mini markets would have an additional expense of Lm12,000 a year because of the tax on plastic bags and this would obviously have to be passed on to consumers.