Macro-economic trends, targets and economic instruments

PACSA’s response to the report
Conclusions in the report
We strongly support the following conclusions in the report:

• Getting the basics right –including better enforcement of illegal dumping and littering – needs to be done before economic instruments can be introduced successfully.(pp44,47)
• Government should acknowledge and harness the potential vested in the voluntary initiatives already undertaken by the packaging and paper industries.(p45)
• Economic instruments are only appropriate where risks are easily managed and where the consequences of not controlling an activity are not sudden and severe (p 47).

We also believe that the type of EI selected is critical and for the packaging and paper industries it is vital that such Instruments as product taxes and broad based deposit/refund schemes are not considered.

There are a number of very successful and appropriate voluntary deposit schemes in the beverages sector which have been well selected for their suitability to the markets they serve. These are focused and work but the paper is absolutely correct that a more general scheme is expensive and vulnerable to fraud and that such schemes should only be considered where specific market failures are identified.

We strongly believe that take back and buy back schemes are more appropriate in SA and these will be dealt with in our Industry Waste Management Plan. We fully agree that any ideas in this area must be fully investigated with affected parties to avoid unintended consequences.

• There should , as far as possible be a clear environmental objective for an environmental tax , the tax should be well targeted to that objective and the number of exemptions kept to a minimum.(p48)
• Certain environmentally related taxes will be capable of raising significant amounts of revenue whereas others will generate little.(p48)
• Every tax reform creates winners and losers and all relevant stakeholders should be engaged in an assessment process (p49)
• The impact of environmentally –related taxes on domestic industries and other aspects of the economy such as employment and inflation are of critical importance (p 49)
• The likely tax burden on different income groups and the anticipated distribution of environmental benefits need to be addressed , and mitigation or compensation measures considered when there are likely to be adverse impacts on income distribution.(p49)
• It is important that any tax measure is aligned with other regulatory or voluntary approaches e.g. job creation , poverty alleviation and the expansion of basic services.(p49)

While from a public policy point of view maximising job creation is important (p50), industry’ s role is to generate wealth by operating at maximum economic efficiency to ensure the jobs are worthwhile and sustainable. Any job creation for its own sake is a public sector responsibility.

We would caution against a packaging tax as against a levy. This might pick up free riders but European experience and experience with the plastic bag tax in SA dictates that there is serious risk that the revenues might be hijacked to fill a hole in the National Budget rather than being used for the purpose originally intended. We prefer a combination of a levy supported by regulation to avoid free-riders.

Other issues

• There is scant reference to energy from waste as a possible solution to unwanted plastic and paper waste. We think this deserves some serious consideration in metropolitan areas.
• Whilst it is a wonderful ideal, we agree that the Polokwane Declaration is impractical and should be reviewed.
• Throughout the paper one needs to consider the consumers current alternative practice of littering and unauthorized dumping until there are proper infrastructure and effective enforcement is in place.
• The paper says the Municipalities’ capacity to carry out their monitoring and enforcement role needs to e improved. It may be worthwhile to consider the Irish solution to the same problem . They established an Office of Environmental Enforcement ( perhaps using the Environmental Management Inspectorate considered in the regulation paper) at provincial or National level and thus focused on the areas where the biggest gains could be achieved at lowest cost and would not impinge on Municipal policymaking powers but provide prioritized support where needed.
• The example of a packaging Material levy in Europe in table 11 is misleading as the Green dot fee is intended to fund industry support for the separate collection and sorting of household packaging waste and is not costly enough to have a significant influence on packaging design.
• Quantity based collection charges are common in Europe and need to be perceived as fair to have credibility in the Communities.
• The UK PRN example Is not fully described and is probably an excellent guide as to what not to introduce here.
• The only OECD paper quoted dates from 1997. It is probably more appropriate to consider the OECD paper Instrument mixes for environmental policy ( June 2007 ) which includes a chapter entitled Instrument mixes for addressing household waste. This stresses that in policymaking it is rarely possible to kill several birds with one stone – where several stones are thrown at one bird (e.g mandatory deposits alongside EPR), this generates a lot of economic inefficiency:
  "There is a danger that one instrument will unnecessarily hamper the flexibility to find low cost solutions to a problem that another could have offered had it been used on its own... In other cases, some of the instruments in a mix are simply redundant, contributing only to increase total administrative costs.”
  The report finds a number of examples of this in the UK.