Garbage, taxes and bureaucracy are among life’s unpleasant certainties. Legislation is presently moving in several states to combine all three costly annoyances by effectively taxing businesses to dispose of the materials they produce after they are consumed, and report to the state on the process.

At least seven states have proposed legislation to impose “extended producer responsibility” (EPR) laws to force disposal and recycling responsibilities and costs on manufacturers and other businesses that produce products. Ostensibly, the bills are about a creating a cleaner environment with less garbage. In reality, EPR is a fancy label for a trash tax since these proposals would shift more costs on employers, particularly manufacturers.

Legislation in seven states—California, Hawaii, Maryland, Massachusetts, New York, Oregon and Washington—is designed to shift more disposal cost to the source of the product, rather than the consumer, to force more product recycling and more efficient packaging. Additional states are expected soon to introduce EPR legislation.

As legislators in these states trip all over themselves to parade their “green-ness,” their imposition of higher costs on employers would come at a very inopportune time – and with dubious environmental benefits and unlikely local taxpayer savings. American businesses, particularly manufacturers, have suffered pandemic-related losses, face global competition, and are paying higher energy costs as the Biden administration and several state governors restrict domestic fossil fuel development.

The primary target of this state legislation is plastic, though several states also would impose producer mandates on paper products (i.e., newspaper, flyers, catalogs, paper fiber) and containers and packaging (i.e., foam, glass, carton, metal).

Garbage disposal is paid generally in two ways, depending where one resides: through municipal taxes or by paying fees to private haulers. These states that shift the cost of disposal and recycling to the in-state production source are guaranteed to increase employer costs, lose jobs and raise prices.

If any property taxpayer sees their taxes go down as a compensatory benefit from these bills, I have a bridge to sell you in Brooklyn. Whatever savings accrue to local governments from shifting garbage disposal and recycling costs almost certainly will be spent elsewhere. Local politicians and bureaucrats are not in the habit of relinquishing tax dollars.

Nationwide, overall recycling of municipal solid waste has doubled from 16 percent in the early 1990s to 32 percent today. Though less than 10 percent of plastic is recycled, aluminum, rubber, glass and steel products are recycled at higher rates, ranging from 17 to 33 percent, according to the U.S. Environmental Protection Agency (Table 1). Newspapers and other paper products have a recycling rate of around 68 percent. According to the American Forest & Paper Association, corrugated containers and containerboard have recycling rates exceeding 90 percent, which EPR legislation could hardly improve upon.

That some legislation, such as in New York, includes mandates for newspaper disposal is especially obtuse considering the existing substantial recycling rates and that the industry is struggling mightily in the Internet age.

Notwithstanding the rhetoric for a cleaner environment, recycling costs are increasing for municipalities, according to the Product Resource Institute, a non-profit entity in support of EPR legislation. The Institute’s solution is to shift the growing costs to businesses producing the products being purchased on-line and at stores by consumers. That may result in some efficiencies, but hardly solves the cost problem.

Shifting disposal costs from “Peter” the consumer to “Paul” the producer is unlikely to help “Peter” very much, if at all – especially if “Peter” is employed by “Paul” who cuts his workforce due to higher state mandated costs and new bureaucratic requirements.

Another problem with EPR legislation is the regressive benefits. Consumers with more income and wealth purchase more products resulting in more waste; while consumers from low-income and working class households purchase less and produce less garbage. Who is being helped the most if disposal costs shift to producers? The households with greater purchasing power, while working class employees are put at risk in those businesses paying the new disposal and recycling costs.

Still another absurdity in EPR legislation is how to assign the cost to manufacturers of recycling or “product recovery,” (i.e., disposal) especially not knowing how much of a given manufactured product making its way through the supply chain is consumed in the state imposing the cost. Yet, several bills mandate businesses figure out this complication and submit a plan to the state for approval.

China and other nations are taking less in waste from abroad, and plastic waste in our oceans has been a major concern in recent years – except the U.S. is not the problem. There are far better solutions without these states imposing bureaucratic garbage tax mandates on manufacturing and other businesses. Such cost shifts will solve nothing and instead will become another self-inflicted economic wound that drives away businesses and jobs to more hospitable locales in other states and overseas.

via CFACT

By Peter Murphy |March 26th, 2021

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March 26, 2021 at 03:49AM