The Waste Tax 1987-1996 Summary1987-1996 The present report gives an evaluation of the Danish waste tax introduced on 1.1.1987 with the aim of reducing and controlling the development in solid waste amounts. Originally, the rate of the waste tax was DKK 40/tonne waste delivered to landfills and incineration plants, but the tax has subsequently been increased and differentiated, so that the rates in 1996 were DKK 195/tonne waste delivered to landfills and DKK 160/tonne waste delivered to incineration. The tax is levied on waste delivered to registered plants, but a refund is granted for waste that is subsequently removed, e.g. for recycling. The report analyses developments in the decade from 1987 to 1996.[fodnote1] Ex-post evaluation The evaluation is a so-called ex-post evaluation, which means that the actual effects of the tax have been studied. The evaluation is hence different in its perspective from the more conventional ex-ante evaluations normally carried out by means of economic modelling prior to the introduction of a tax. As the present evaluation seeks to estimate the actual effects of the tax, including the interplay with other policy instruments, the report also presents a more general status of the results achieved with the Danish waste and recycling policy in the last decade. Interplay with other policy instruments A brief analysis of the Danish waste sector shows that there are several different policy instruments affecting the management of waste. Several of these instruments focus specifically on certain types of waste, and the main barrier to the incentive of the waste tax is the pricing of local waste collection fees, which normally do not reflect the amount of waste actually delivered. When the Danish waste tax was designed the idea was, rather, to influence waste management companies towards making facilities available for recycling and separation. In addition, an analysis of policy instruments reveals that a number of important waste fractions have not been regulated separately, and that industrial and commercial waste and construction and demolition waste are likely to be sensitive to the weight-based waste tax. Net waste delivered By means of waste tax data from the Central Customs and Tax Administration, descriptions of the changes in the amount of taxed solid waste from 1987 to 1996 have been drawn up. It has been necessary to adjust for the change in the taxable base, which took place in 1990, as small inert waste landfills and private landfills were also levied from this year. An account has been made of gross waste delivered, waste subsequently removed, and net delivered waste. Net waste delivered is the most appropriate indicator of the development in waste amounts, as this figure has been adjusted for the transfer of waste and the subsequent removal of slag which is re-delivered to landfills. Net waste delivered is gross waste delivered minus waste subsequently removed. Net reduction of 26% From 1987 to 1996, a 26 per cent decrease in net taxable waste delivered to municipal plants was registered[fodnote 2] . With regard to the small private landfills for inert waste and other private landfills, a decrease of 39 per cent was observed from 1990 to 1996. This decrease took place mainly in the period from 1987 to 1993. Since 1993 the amount of waste has been slightly increasing, and this trend is believed to be connected with the positive economic development in Denmark since 1993. Industrial and commercial waste increase No coherent waste statistics are available which allow for a more detailed description of developments in the different types of waste in the decade studied. However, by using figures compiled by RENDAN (Danish Waste Management Info Centre) in their 'Material Stream Analyses' for 1987 to 1993, it has been possible to analyse developments in the main types of waste. The analysis shows that industrial and commercial waste has increased (by 8 per cent), while household waste, construction and demolition waste and other types of waste have decreased. The relatively most significant reduction has taken place in construction and demolition waste (63 per cent), but reductions in household waste (16 per cent) and other wastes (22 per cent) are also noteworthy. Other wastes include slag and sludge. Statistics also show that a marked increase in recycling has taken place, in particular of heavier fractions (construction and demolition waste, compost, bulky waste), whereas mandatory collection of glass and paper only makes up a smaller proportion of the total decrease in waste amounts. Current paper collection is estimated by RENDAN to comprise only about half of the potential, whereas the recycling of the heavier fractions amounts to 70-80 per cent. The more limited success with paper and glass collection indicates that the "command-and-control" instrument has been less efficient, whereas the development in heavier fractions indicates a positive effect of the waste tax. Studies Three studies have been carried out in order to identify the role of the waste tax in the development in solid waste amounts;
Industrial and commercial waste, construction and demolition waste The study of industrial and commercial waste, which was completed before the analysis of the RENDAN waste data, showed that among enterprises interviewed, attention to waste management and costs varies. The most professional systems of waste management were found at breweries and in the iron and steel industry, while newspaper printing houses, the service and trade sector and public institutions did not have a well-developed waste management system. Typically, the physical management of waste takes place without any knowledge of financial aspects. Most of the enterprises interviewed have taken initiatives to increase recycling, but apparently the waste tax has not played a significant role for these initiatives. Apart from the lack of attention to the financial aspects of waste management, it also seems to be a problem that the rate of the waste tax in 1996 was too low to offset the additional costs connected with sorting and separate collection of recyclable materials. Typically, separation entails high costs, and often there is not a profitable market price for residual products. The relatively high increase in the tax rate, which took effect from 1.1.1997, may, however, tip the balance in favour of recycling. Paradoxically, the study showed that the amount of solid waste generated at enterprises in the service and trade sector and in public institutions exceeds that at more conventional manufacturing enterprises. With regard to construction and demolition waste, considerably more attention is paid to the waste tax as large sums can be saved through recycling. With the rate that applied in 1997, estimated possible savings of DKK 300/tonne are obtainable by crushing, as compared to landfilling. Recycling in municipalities The study of recycling activities in local administrations and intermunicipal waste companies shows that recycling schemes are well established today. There has been different motivation for these efforts, but in general local political priorities are seen as the most significant factor. The desire to keep waste management costs low for citizens by giving priority to recycling in order to reduce the waste tax, is generally stated as an important reason, particularly when it comes to the heavier fractions of waste. For some of the heaviest waste fractions sensitive to the waste tax (garden waste, bulky waste, construction and demolition waste) about 70-80 per cent of local administrations with collection schemes mention the waste tax as being significant for the economy of the waste collection systems. Weight-based collection fees The degree to which citizens actually use the recycling schemes made available to them is a significant issue. For example, recycling schemes established due to the impact of the waste tax, are not necessarily used. The collection fee for households is normally based on the volume of the waste bin and the frequency of collection, and not on weight, so there is little financial incentive for householders to reduce their amounts of waste. A few local administrations have, however, introduced systems with weight-based collection fees, and a review made by the Danish Building Research Institute of waste data from ten municipalities with different schemes of waste fees indicates that weight-based fees lead to a more effective recycling effort. In the municipalities of Tinglev and Bogense, which are both running this scheme, the amount of residual waste from households has been reduced to about 100 kg/capita. The drop in waste quantities is matched by increased recycling, and the figures do not indicate that fly-tipping is a serious problem. In municipalities with more conventional systems of waste collection fees, the amount of residual waste is still between 200 and 300 kg/capita, despite the availability of recycling facilities. Only the municipality of Vejle has reached the same low level of residual waste per capita as Tinglev and Bogense, but this result has been achieved with a comprehensive collection system that is costly to operate. These results indicate that more substantial reductions in waste amounts are possible with the present level of the waste tax, provided there is better 'transmission' of the price signal to the individual waste producer. The tax has an impact The evaluation shows that the waste tax has had a significant impact on the reductions in taxable waste. The tax has been decisive for the reduction in construction and demolition waste, while for the heavier fractions under 'other wastes' and 'household waste', it has provided an important incentive for separate collection. With regard to household waste, the effect has been achieved by the incentive from the tax to local administrations and waste companies to introduce separation schemes, but experience from municipalities with weight-based collection fees shows that household waste can be reduced even more with the present rate of the waste tax, provided that payment for waste collection has a more direct relationship to the amount of residual waste actually generated. There are no indications that the waste tax has led to fly-tipping, as recycling facilities have received increasing amounts of materials, balancing the reduction in residual waste. In Chapter 9 the design of the waste tax is discussed, and proposals for adjustments are given. Further increases in the tax should await an evaluation of the effects of the increase that took effect in 1997. ________________________________ 1/ With effect from 1.1.1997 the tax was increased to DKK 335/tonne waste for landfills, DKK 260/tonne waste to incineration and DKK 210/tonne waste to incineration with a minimum of 10% power generation.2/Municipal plants are municipal, intermunicipal and other plants receiving municipal domestic waste, cf. Chapter 4.
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