The Ombudsman’s decision to instruct the government to issue credits and exemptions to traders who sell domestic goods once they participate in approved waste recovery schemes must have been welcomed by both business organisations and consumers.

Few would disagree the protection of the environment is a priority that needs to be addressed with regulatory provisions that are enforced fairly and consistently. Aiming to cut the amount of waste resulting from the packaging and scrapping of products through eco tax schemes is arguably a good way of protecting the environment. But when such systems end up in the eye of such controversies as double charges, then, surely, the credibility and workability of such initiatives are impaired.

According to the Ombudsman, the government is interpreting the Eco Contribution Act in an illogical an unfair way by encouraging producers “to enter an approved scheme, pay their dues towards the approved scheme and then pay eco contributions”. This is not only unfair on producers but also “on the consumer who, in the end, always foots the bill by buying marked up products”.

This matter once again raises doubts on the government’s often declared commitment to protect consumers. One serious implication of such practices is they often give rise to inflationary pressures at a time when competitiveness is still not improving and consumers are hit hard by hefty price increases in essential products like fuel, gas and food products.

Many of the organisations representing producers and sellers demonstrated their reluctance to pass on more government-induced costs to consumers whose spending power is under pressure. They may not be doing this for philanthropic reasons but they are certainly acting sensibly in showing concern about the ability of customers to keep absorbing increased costs.

One could argue the government has to raise money from somewhere and this could be one way of doing so. But the Ombudsman was right in stating “The eco contribution is not and should not be turned into another source of income for the government”.

Every tax should be fair and transparent in its application. Promising producers of goods a refund or a tax credit if they participate in an approved waste disposal scheme and then failing to do so on a legalistic interpretation of a particular word in the Eco Contribution Act can only be considered as failing the test of both fairness and transparency.

One hopes the government will act swiftly to refund the excess tax charged to those who participated in the approved waste disposal schemes. The thorny issue will be how the consumers, who in most cases have ultimately paid for this extra tax, will be treated. It would make no sense for producers to pocket any refunds made by the government without consumers in some way benefiting from such a decision. It will be truly ironic and grossly unfair if the consumer ends up having to pay more taxes to finance this government refund.

This issue risks strengthening the argument of those who take a cynical view on the government’s efforts to protect the environment. These consider any scheme based on “the polluter pays” principle to be just another way of giving a respectable name to revenue generating streams. Yet, the fragile environment is really at risk and needs protection.

If tax sanctions are used to discourage people from polluting, this must be done in a fair, reasonable and transparent manner.