Ireland prepares to introduce environmental and waste recovery taxes

Circular Economy, Waste Management (Amendment) and Mining Development (Amendment) Bill 2022 (Circular Economy Bill), currently under discussion in the Irish Parliament, will introduce an environmental tax and a waste recovery tax, as well as several other provisions.

The circular economy plays an important role in the EU green agenda. In March 2020, the European Commission adopted a Circular Economy Action Plan which is one of the main building blocks of the European Green Deal. The objective of the transition to a circular economy is to reduce the pressure on natural resources and to create sustainable growth and jobs. It is also a prerequisite for achieving the EU’s 2050 climate neutrality target and for halting biodiversity loss.

Across Europe, countries are also adopting circular economy practices at the national level. The Irish government had already put in place strategic plans to achieve a circular economy with the 2020 Waste Action Plan for a Circular Economy and the 2021 Whole of Government Circular Economy Strategy.

The Circular Economy Bill places these plans on a legal footing. The objective is to achieve a more sustainable production and consumption model that moves away from the economic model of single-use and disposable materials and goods, by promoting reused resources and reducing consumption.

The circular economy should not only have a positive impact on the environment, but can also potentially offer new economic and social opportunities.

Article 11 of the Circular Economy Bill provides that the Minister for the Environment, Climate and Communications (the Minister) may, with the consent of the Government, make regulations setting an environmental charge for the supply to customers, in supermarkets, petrol stations or other specified categories of retail premises, of the following goods:

  • disposable cups;

  • single-use containers;

  • Single-use packaging (or specified classes thereof); and

  • Plastic bags or specified categories of plastic bags. (These regulations will replace the Waste Management (Environmental Tax) (Plastic Bags) Regulations 2001 and the Waste Management (Environmental Tax) (Plastic Bags) Ordinance 2007.

Regulations should be made when there is a suitable reusable alternative or a suitable alternative with a lower level of material wastage, and when the alternative is, or could be made, readily available.

The Minister must take into account the waste of material associated with the single-use item or category or classes of single-use items. They will then set the amount of the fee with a view to reducing waste and reducing the use of the single-use item concerned. This amount must be between €0.20 and €1.00 ($0.20 to $1.02) for each item, and it may be modified by the Minister at most once per fiscal year, depending on the evolution of the consumer price index.

The environmental fee will be payable by the person carrying out an activity in the commercial premises mentioned above. The regulations must specify the collecting authority to which the levy is payable and will confer the related powers for the collection and recovery of the levy.

In addition, the bill outlines a list of items that may be prescribed by regulation, including the maintenance and provision of records and the exclusion of certain categories of single-use items from the levy, and prescribes interest and the penalties applicable in the event of non-payment of the fee.

Clause 29 of the bill provides for the insertion of a new section 73A (the waste recovery charge) into the Waste Management Act 1996, providing that the Minister, with the consent of the Government, shall establish regulations setting a chargeable tax related to the recovery of waste. or the export of waste for recovery.

Different levies may apply to different categories of activities. However, the total amount of the levy will not exceed €120 per tonne. The Minister may modify this amount at most once per fiscal year by a maximum of €50.

The recovery fee will be payable by the person or entity carrying out the waste recovery activity or, when the waste must be shipped for recovery, by the waste holder or the category of waste holders that may be prescribed. .

The regulations must also provide that the fee is due to the local authority in whose jurisdiction the waste recovery activity concerned is carried out. Alternatively, where the waste recovery activity is to take place out of state, the regulations will provide that the levy is payable to Dublin City Council and confer the corresponding powers for the collection and recovery of the levy.

The bill also provides that a person or entity that does not pay the recovery tax commits an offense and specifies the interest to be paid.

Climate change has become a key priority on the Irish political agenda both nationally and intentionally. In this regard, environmental taxes are a useful instrument to help achieve climate goals. An increasing number of environmental tax provisions have been introduced in recent years to cover more sectors. For example, the current tax on plastic bags will be replaced by the new environmental tax which will cover a greater number of items.

Other environmental tax provisions are expected to be introduced in the near future.

It is important that economic operators are aware of these changes in order to reduce tax burdens and plan their business activities in a new way that is both efficient and environmentally friendly.

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