Ireland’s Minister for the Environment, Community and Local Government, Phil Hogan, has announced that he will not introduce a packaging levy ‘at this time’, due to the cost of implementation.

The objective of a packing levy is to reduce the level of packaging, while increasing incentives for further recycling, reuse and recovery behaviour. By placing a tax or levy on packaging, it is hoped that less packaging would be used and technological innovation would be encouraged, as less ‘packaging-intensive’ goods would be cheaper, and thus save producers money.

The introduction of a charge on all packaging was first put forward in a consultation on 27 May 2011. After receiving sixty-eight submissions to the consultation, the Department of the Environment, Community and Local Government (DECLG) then commissioned a report that sought to analyse: the possible economic effects of a packaging levy; how it might operate; any alternatives to a levy, such as the possibility of a deposit-return scheme (or ‘reverse vending’); and how a charge on packaging might ‘work in tandem and affect the operation of the compliance schemes’.

Report into packaging levy proposals

A report into the matter, ‘A Packaging Levy for Ireland?’ was released by Paul K Gorecki from the Economic and Social Research Institute and Department of Economics at Trinity College Dublin in May of this year, and found that while the object of the packaging levy might be ‘clear’, it questioned the logic of reducing packaging ‘since it performs many valuable functions’, such as preservation of food and protection of goods.

Gorecki concluded that a packaging levy was ‘likely to generate a large number of costs – to the legislative process, to public administration, to business – with few, if any, tangible benefits’. He added that a packaging levy could also be in danger of seeing producers burdened by ‘double regulation’ as they are currently bound by extended producer responsibility schemes (EPRs).

This, the author said, is not only ‘likely to create additional administrative burdens on producers – which will be reflected in higher prices to consumers as well as putting Irish based business at a competitive disadvantage leading to job losses – but also result in suboptimal use of packaging, which performs many useful functions’.

In summary, the report found that ‘the potential for a packaging levy is limited’ due to costs. However, it added that this ‘does not mean that there may be narrow quite specific externalities where a levy could be introduced, such as the plastic bag levy’. Gorecki also said that a packaging deposit-return scheme would also be ‘inappropriate’ due to the existing EPR packaging scheme, the potential ‘high administrative costs’ of introducing the scheme, and the ‘limited experience with deposit and return schemes beyond drinks containers’.

In light of this report, Hogan said: “After careful consideration, I have decided not to proceed with the introduction of a packaging levy at this time.

“The main reason for my decision is that the introduction of a packaging levy is likely to generate a number of costs – to the legislative process, to public administration, to business – with few identifiable additional environmental benefits, given our very successful packaging recovery and recycling performance to date in Ireland.”

News ‘extremely disappointing’

The Environmental Pillar, a coalition of 26 national environmental groups, said it was “extremely disappointed” with the decision, adding that the continued export of packaging waste was “hardly a good way to increase Irish jobs”.

Mindy O’Brien, spokesperson for the Environmental Pillar, added: “A properly constructed packaging levy won’t increase costs to business. It will shift industry focus towards more reusable packaging, and save money for many businesses, which pay to dispose of packaging.”

O’Brien added that Ireland’s recycling rate for PET bottles is “an abysmal 29 per cent” and the rate for aluminium can recycling is “just over 50 per cent”, and concluded that with a levy in place, Ireland could “do much better with feedstock that is fully recyclable”.

However, producer compliance scheme Repak, welcomed the decision, saying that it had “serious concerns on the introduction of such measures and their potential effect on the funding of recycling”.

It cited that a packaging levy would amount to “double taxation” because of the existence of the Repak levy on the producers of packaging, which it says is “widely regarded as equitable, and has produced very impressive results”.

Repak added that since its inception, packaging recycling rates in Ireland increased from “well below 15 per cent” in 1998 to “over 70 per cent at present”.

Read the report on the impact of introducing a packaging levy for Ireland.