National tax on virgin plastics. Opportunities and impacts

Approximately 2 billion kg of plastic products are currently sold in the Netherlands each year. This study, prompted by a parliamentary motion by Van Raan (Party for the Animals), investigates the scope for a tax on virgin plastic as a means of making the plastic products value chain more sustainable. The aim of such a charge would be to reduce production and use of virgin plastic by making it more expensive.

The easiest place to impose a tax would seem to be where plastic granulate and polymer powder are sold to producers of plastic (intermediate) products, as the product taxed is then homogeneous and easy to measure and the number of parties subject to the tax relatively small (15 producers and importers). In addition, recyclate seems relatively easy to exempt from the tax, while there would be a direct incentive for its use.

Taxing Dutch polymers would involve a risk of the resulting plastic products being replaced by untaxed foreign imports and the production of virgin plastics thus not actually being reduced but merely shifted. This leakage would reduce not only the tax’s effectiveness, but also the international competitiveness of Dutch producers. The Netherlands could also advocate a EU-wide polymer tax, so that a uniform tax was at least being paid throughout the EU. While a tax on plastic end-products avoids leakage, it would be harder to implement because of the large number of products and charge points. Incentivisation of recyclate would be more indirect than if polymers were taxed, moreover. A simpler design might be to restrict the scope of the tax to certain categories of virgin plastics, such as packaging.