At the initiative of the Czech minister, Petr Hladík, the European environment ministers discussed the possibility of introducing a reduced value added tax (VAT) for recycled or recyclable products at the Environment Council in Luxembourg on Tuesday 20 June. Slovakia, Cyprus, Austria, Bulgaria, Belgium and the European Commission are in favour.
“In the European Union, we don’t have enough raw materials or basic resources, so we can’t just use them once and then throw them away; that’s very bad for our planet and for our carbon footprint”, said Hladík. In his view, VAT is one of the economic tools that could be used to this end. “Tax incentives are also very often recommended by the OECD”, he insisted.
A position shared by his Slovakian counterpart: “Reducing VAT on specific materials could significantly improve the competitiveness of the recycled materials and also have a positive impact on reducing Municipal waste”.
However, the current tax framework does not allow this. “When the EU Council adopted the reform last year (see EUROPE 13085/8), the finance ministers came out against the use of variable VAT rates based on environmental performance, believing that it was not an effective tool”, points out Virginijus Sinkevičius, European Commissioner for the Environment. He informed ministers that the Commission is currently conducting a public consultation on the polluter pays principle.
Furthermore, as the Cypriot minister, Petros Xenophontos, pointed out, such a tax raises a number of questions, such as “differentiating the VAT rate by product category and by recycled content rate” or the choice of “a single rate that could mislead consumers”.
Another major problem is that this issue falls within the remit of the Ecofin Council and requires a unanimous vote.
Read the document from the Czech Republic: https://aeur.eu/f/7mr (Original version in French by Anne Damiani)