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Budget of 2003 saw the announcement of eco-taxes on a variety of products but few had any idea what would hit them until the government announced its intentions soon after the end of the Trade Fair. It was debated in the hot days preceding Santa Maria, and passed into law September 1.
The tax came under the guise of an eco-contribution and came under heavy fire from the public, the constituted bodies and the political parties in opposition. All complained they were not consulted adequately. It was ironic that even the political party most enthusiastic for green taxes, Alternattiva Demokratika, slated the Eco-contribution.
The criticism mainly centred around the fact that, as introduced, the contribution does not distinguish between products that damage the environment a lot – which should be taxed more – and others that damage it less.
In the end the government’s defence was to say that it needed revenue for waste management, and while that was recognised by all, critics still called for a tax that would punish the polluter rather than the consumer.
The tax affects beverage bottles, white goods (fridges, washing machines) black goods (TVs, mobile phones) tyres and toiletries and cosmetics.
The law was attacked for not distinguishing between one-way plastic and two-way glass beverage containers and between large and small containers of toiletries and cosmetics. It was pointed out that the effect of eco-taxes should be tax neutral in the sense that more tax would be imposed on polluting products but less on, say income, a measure that this government failed to take on board.
The tax charges ranged from a 5c flat rate on toiletries and cosmetics to a blanket charge of Lm10 on white goods.
The business community, especially the GRTU opposed the tax as introduced and was very concerned that it was to be imposed on stocks that were at the place of business when the tax came into force September 1. Eventually government compromised and the tax was not imposed on current stocks.
Responding to criticism about the green credentials of the tax, which was introduced over and above the 18 per cent VAT surcharge, Minister George Pullicino said it was important to get the law passed and the system up and running, and that the law could be fine tuned at a later stage. A commission has since been set up to advise the government on the workings of the tax and is expected, among other things to advise the government to introduce a deposit refund system similar to that already in place of soft drinks for other beverage packaging.
It is not clear how much has been collected in eco-contributions but next year the government expects to pocket Lm 6.5 million in 2005. Of that total Lm2 million is expected to be raised by a contribution on additional products including plastic bags and packaging containers. The expected expense on waste management will also be of Lm6 million.
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