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Barrierer og potentiale for momsnedsættelse på reparationsydelser
Summary and conclusion
Waste from the private households, including bulky waste, is increasing. The total
volume of bulky waste amounted to 671,800 tonnes in 1999 which corresponded to
approx. 24% of the total volume of refuse and 5% of the total volume of waste in Denmark.
Refuse is among others a consequence of consumption patterns and as a result of the
boom, the consumption is increasingly controlled by lifestyle rather than needs. This
development trend is contrary to the political strategies on a sustainable development
focusing on an optimum use of resources. Thus, with a view to ensuring an optimum use of
resources and reducing the volume of refuse, it is necessary to devise methods for
prolonging the life of products.
Repairs of durable consumer goods can contribute to maintaining a number of products in
the market thus reducing the generation of refuse over time, but repairs cannot completely
prevent the generation of refuse as all products eventually become refuse. As an
alternative to refuse, the products can also remain on the market through reuse.
From a refuse preventive perspective, it would be expedient to create incentives to
repair the consumer goods which comparatively form the most significant refuse volume or
contain environmentally damaging materials and on which the consumers spend the greater
part of their money.
The product groupings "furniture and household effects", "electric
products/white goods" and "electronic products" totalled in excess of
220,000 tonnes of waste in 1999. This corresponds to more than 33% of the total
volume of refuse. In addition, "electric and electronic products" typically
include a number of environmentally straining materials which are estimated to represent
9,300 tonnes.
Durable consumer goods on which the households on average spend the major part of their
money include "furniture and household effects", electric products/white
goods" and "electronic products". On average, a total of DKK 9,267 or
4% of the consumer's money is spent on these product groupings each year.
Thus, it is considered expedient to give the consumers incentives to repair the product
groupings "furniture and household effects", "electric products/white
goods" and "electronic products".
However, whether it is possible to obtain a reduction in the volume of refuse from
these product groupings depends on whether it is technically possible to repair the
individual products and whether the consumers are willing to have the products repaired or
to buy the products second-hand.
The attitude survey shows that the consumers' attitude towards repairs and reuse
depends on the product grouping in question.
When speaking of furniture, a third of the respondents discarding their furniture does
not have the furniture restored or repaired because it is too expensive or too difficult
to do so. 28% prefer to have another piece of furniture whereas 20% are of the opinion
that the furniture cannot be repaired.
When the consumer has furniture repaired, the inclination to pay is rather high
compared to the replacement value and moreover there is a comparatively high inclination
to buy second-hand furniture.
The possibility to keep more furniture on the market thus depends on whether the
furniture sold is of such a quality that it can be repaired or restored. Furthermore, the
market for second-hand furniture can presumably be extended, as an example through reuse
schemes, as the consumers have an interest in buying second-hand furniture.
With regard to white goods, approx. half of the respondents discarding their white
goods do not have them repaired because it is too expensive or too difficult. 32% would
rather have another product as new white goods are technologically better, while 10% state
that the products are beyond repair.
The inclination to pay for repairs of white goods is very poor as 60% of the
respondents would only pay up to 20% of the replacement value of a comparable product.
Thus, the possibility to preserve more white goods on the market depends on whether the
repair service can be made adequately favorable compared to the price of a new product.
With regard to electronic products, approx. half of the respondents discarding their
electronic products state that it is too expensive or difficult to repair these. 39% state
that they prefer another product because new electronic products are technologically
better, while 10% state that the products are beyond repair.
As for white goods, the inclination to pay for repairs of electronic products is very
poor. 60% of the respondents are only willing to pay up to 20% of the replacement value of
a comparable product. This is presumably due to the fact that products within this product
grouping have been subject to a rapid development with regard to functionality and design.
Regarding electronic products, approx. a quarter of the respondents is willing to buy
second-hand products.
The possibility to keep more electronic products on the market therefore depends on
whether the repair service can be made adequately favorable compared to the price of a new
product. In addition, the market for used electronic products can be considered as having
a potential for expansion, for instance through reuse schemes.
More than half of the respondents hand over discarded consumer goods for bulky waste,
while the other consumers sell or give the goods away. Moreover, consumers are generally
of the opinion that it is a good idea to repair and resell discarded products.
The majority of consumers use the one year complaint time-limit. Thus, it is to be
expected that a major part of the products could be kept in the market for a longer period
of time if the time-limit for complaints was extended.
Finally, the attitude survey shows that when the consumers have their consumer products
repaired, it is to a large extent due to sentimental value.
It is not possible to exert influence on the sentimental value of a product or change
the fact that the consumer no longer needs it. It is solely the price of the repair
service and the replacement value which can be affected through economic control
instruments.
A traditional economic control instrument can either work through a price reduction for
repair services or through a price increase of replacement products.
A reduction in VAT can, in a highly targeted way, form the basis for a corresponding
price reduction on repair of furniture, electric products/white goods and electronic
products thus creating an incentive to have faulty products repaired. A further definition
would be necessary to ensure that the VAT reduction covers the repair services to be
supported in this way and that the scheme is not abused by transferring unwanted products
and services to the reduced VAT scheme.
Neither the Danish VAT Act nor EU's VAT Directives upon which the Danish VAT Act is
based hold the possibility of introducing a reduced VAT rate for repair services. Over
time requests for reduced VAT rates in various areas have frequently been put forward, but
changing tax ministers have so far not had the intention to reduce the rate. Similarly,
the European Commission is generally not in favour of reduced VAT rates. Thus, so far
there has been no political intention to implement the reduced VAT rates and it is
therefore to be expected that it will be difficult to implement a change of the existing
VAT rules.
Excise duties can be levied on durable consumer goods such as furniture, electric
products/white goods and electronic products with the effect that the products' purchase
prices increase. In this way, the choice between having faulty products repaired and
purchasing new products is influenced. On the basis of the attitude survey it can be
concluded that if the occasion should arise, the excise duties should be of a considerable
size. This may entail an increase in the cross-border trade of the products in question.
Partly the environmental aim will be disregarded to some extent and partly an imbalance of
the country may occur where consumers in the border areas can avoid the duties. The duties
may furthermore have the derived effect that low-income groups cannot afford to purchase
the necessary consumer goods or that consumers will have a tendency to choose inexpensive
and perhaps less environmentally sound products.
A price reduction on repair services may take place through subsidies supporting repair
services. Subsidies must comply with the rules of the Danish Competition Act and the
subsidy must be in accordance with the EU government subsidy rules.
An extension of the domestic services scheme may be considered so that it includes
specified repair services. Generally, the repair price must be rather low compared to the
replacement price. For this reason it can be expected that a subsidy for repair services
should be considerably higher than the subsidies granted in connection with the present
domestic services scheme. It can be questioned whether the experience from the domestic
services scheme can be transferred directly to the repair services area as the intention
of the domestic services scheme is different than the one applicable to the repair
services area.
The so-called "Grønne Jobs" (green jobs) pool is hardly applicable to
ordinary repair activities as these do not satisfy the requirement of being innovative.
However, it is probably possible to use the scheme when the repairs are performed in a
"second-hand shop" in connection with reuse centers and disposal sites.
Traditional deposit and discount schemes are hardly applicable in connection with the
purpose given. These schemes are characterized by encouraging consumers to collect and
hand in products with a particular environmental impact. However, it is conceivable that
the schemes may be used in such a way that the purchaser will be charged a deposit when
buying a new product. The amount may then be repaid fully or in part when the consumer has
the product repaired rather than buying a new one. However, a number of administrative
barriers exist. Thus, it must be considered whether the state or the individual dealer
should administer the scheme and it must be ensured that the deposit is repaid even if
another repairman than the dealer is used.
The refund system used in connection with scrapping of cars conforms poorly to the
intention of having the consumers have their products repaired rather than purchasing new
ones. A refund system in connection with furniture, electric products/white goods and
electronic could have the result that consumers choose to discard their products and
purchase new ones rather than having the old products repaired.
The use of insurance schemes and complaint time-limits are not covered by the
traditional definition of economic control instruments. However, the schemes may be
considered direct counterparts of the normal economic control instruments when the purpose
is the incentive to promote the refuse prevention through strengthening of repair
activities.
Among consumers there has proven to be an increasing interest in taking out voluntary
insurances when purchasing major durable consumer goods. Consumers thereby ensure a
prolonged warranty period for the product than the generally applicable complaint
time-limit. This can be taken as an indication that consumers generally have a desire to
be ensured for a longer period of time than the one-year complaint time-limit allows.
Complaint time-limits may in many ways be considered to have the same effect as an
insurance scheme. The complaint time-limit in the Danish Sale of Goods Act means that the
consumer can have a faulty product repaired by the supplier without charge or have the
product replaced with a similar product within the time-limit. The effect of this may be
that when making good damages, the supplier will as a starting point choose the solution
costing the least. To the extent that it pays to have the product repaired, this must thus
be the supposed action. The supplier will be in a far better position to make this
assessment than the consumer. It will be possible to utilise repair facilities more
effectively and when giving the consumer advice the supplier will not be in a conflict
situation regarding the desire to sell a new product to the consumer and the desire to
have the faulty product repaired. The complaint time-limit may also have the effect that
the supplier is encouraged to primarily sell products which can be repaired technically.
Thus, it is likely that the product will remain in the market for a longer period of time.
It is characteristic of the complaint rules that the supplier holds part of the
responsibility for faulty products. This harmonises well with the general principle that
it is the polluter who pays. The administration of which products are covered by a
prolonged complaint time-limit can be left with the parties on the market. Generally, the
consumer will have to provide documentation as to when a product has been purchased.
A prolonged complaint time-limit is considered particularly suited in relation to the
product groupings chosen.
The length of the complaint time-limit should be fixed considering the special
circumstances of the various products. The starting point must be the desired life of the
product considering the technological development, including the product's environmental
characteristics. A correction for the realistic life of the various products must be made
and allowance must be made for the companies' interests so that they do not risk facing
repair requirements for technical products for a very long period of time. Negotiations on
this subject can be made with the various industry representatives in the area.
The optimum result of a differentiated complaint time-limit is, however, presumed to be
obtained through fixing the length of the complaint time-limit and defining the
application in such a way that it will be acceptable for both industry and consumers. It
is essential that the consumers sense that they get full value for money. Otherwise, the
risk is a distortion of the market with e.g. cross-border trade as a consequence. Thus,
the length of the complaint time-limit cannot exceed the consumer's time frame when
purchasing the product.
The one-year complaint time-limit prescribed in the Danish Sale of Goods Act must be
prolonged to minimum two years as per 1 January 2002 according to the European
Parliament and Council Directive 99/44. Thus, the Directive does not prevent Denmark from
passing a prolonged complaint time-limit.
Recommendations
From a refuse preventive perspective it is recommended that consumers are given an
incentive to repair the product groupings furniture and household effects, electric
products/white goods and electronic products.
For furniture, the inclination to pay for repairs is relatively high and an economic
control instrument would presumably not have major effect. However, consumers have a
comparatively high interest in purchasing second-hand furniture and it is therefore
recommended that the council bulky waste schemes are extended to include an increased
reuse through i.a. second-hand stores which are deemed self-supporting.
With regard to white goods and electronic products, the inclination to pay for repairs
is relatively small and the interest to buy particularly second-hand white goods is
limited. If products within these product groupings are to be maintained in the market, it
is therefore recommended that the present complaint time-limit used by 90% of consumers is
extended.
At the same time an extension of the complaint time-limits of the Danish Sale of Goods
Act is considered the optimum control instrument for creating an incentive on the part of
the consumers to have faulty products repaired rather than purchasing new products.
All three product groupings chosen, "furniture and household effects",
"electric products/white goods" and "electronic products" are found to
be suitable to be covered by an extended complaint time-limit. In our opinion, the best
result would be to differentiate the time-limits according to the product groupings chosen
as the time-limit should be fixed considering the circumstances of the various products,
such as product life, environmental characteristics, technological development etc.
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