It turns out that for two years now Latvia has been paying the European Union enormous amounts for non-recycled plastic, as reported by TV3 programme Nekā Personīga. However, this money is supposed to be covered by manufacturers and merchants, who are the ones to pick which materials to use in their products and packaging.
Attempts to present businessmen with this duty were blocked twice in the past. Now Latvia is at risk of receiving a fine for not adopting a biological waste management system.
From 2021 onward the EU budget receives an additional fee paid by member states for every 1 kg of non-recycled plastic. In the first year of this fee being adopted, Latvia paid EUR 20 million. The fee must not allowed to exceed 1% of a country’s economy. This is why it was reduced to EUR 14.8 million. For 2022 the amount with the discount was EUR 15.3 million.
Director of the Environment Protection Department to the Ministry of Environment Protection and Regional Development Rudīte Vesere comments: «It is not a fine, and that is most important thing I wanted to say, because this is what people perceive most of the time: that we are paying a fine.
It’s not a fine.
The fee is associated with with recycled plastic packaging. Countries have to pay to the EU budget EUR 0.80 for every 1 kg of non-recycled plastic packaging.»
Member states knew about the new fee and had time to adapt their systems to make sure the fee is collected from those who import or produce goods with non-recycled packaging. Latvia does not have such a system, and so the fee is covered from the state budget.
Vesere continues: «Manufacturers are not too motivated to change something in their approach and choice of packaging. This is because they don’t have to pay anything, as the fee is paid by all taxpayers. VARAM saw a potential solution in amendments to the Natural Resource Tax Law, which is what was proposed in 2021.
Unfortunately, amendments were never submitted in the end. They were halted by the Cabinet of Ministers and remain unapproved to this day. These amendments suggested making it a duty to pay the aforementioned fee for manufacturers – the ones who use this packaging, and not only manufacturers in Latvia but merchants that import such packaged goods from abroad.»
But no system was adopted in 2021. This is because the Cabinet of Ministers’ position was that no taxes would be adopted and existing ones would not be changed during the pandemic. Then the Minister of Environment Protection Artūrs Toms Plešs blamed the prime minister for that. The same discussion was held in 2019. Back then manufacturers objected to it by saying that they already have a burden – the bottle and can deposit system. Politicians backed off.
Latvian Federation of Food Companies manager Ināra Šure: «The position of producers is that presenting yet another burden is too much. But on the other hand, we are socially and ecologically responsible people. We understand that we have to move away from non-recycled plastic. It should be done in 2025 for 2024, so that manufacturers have time to prepare, because transition to a more environmentally friendly packaging takes times and investments.»
Now the Ministry of Finance has objections.
The institution wants to wait for tax guidelines for the next three years. Now that amendments have been blocked a third time, waste managers have asked Saeima deputies to act and propose amendments on their own.
Latvijas zaļais punkts LLC board chairman Jānis Aizbalts: «We believe this is all wrong. Like any tax related to pollution and waste sorting, EU regulations make it clear that the one responsible for pollution is the one who pays. This means you pay for the goods you buy and the goods you use. Only the one who uses the goods and potentially generates waste is the one who pays. This cannot be put on the state budget, because this would mean everyone has to pay, including the ones who cannot afford new products and the ones who don’t go shopping too often.»
Latvia forms its waste sorting and recycling policy using the Natural Resource Tax. It is paid for pollution, first-time car registration and use of water by hydro power stations. The fee for production packaging here
does not exceed even a million euros a year.
The actual Natural Resource Tax amount manufacturers should pay is several times larger than that – close to EUR 300 million a year. Businesses are relieved of most of it because they participate in various responsibility systems. It ensures collection and recycling of sorted waste. Judging by the turnover from responsibility systems, businesses pay about EUR 30 million every year, thereby avoiding the duty to pay the Natural Resource Tax.
Director general of the State Environment Service Elita Baklāne-Ansberga: «The Natural Resource Tax rate is a financial instrument. It’s not an estimate of the damage done to the environment. It exists to encourage companies to join in the responsibility for manufacturers to make it more attractive and efficient than paying the tax. Responsibility for manufacturers is not just about the quality of goods at the time of sale, but the entire life course until the moment goods become waste. The life cycle ends when the products is recycled into new materials.»
Manufacturer responsibility systems ensure packaging is sorted. Emptying of plastic, carton and glass containers outside shops and apartment homes is paid for from such systems. Then it is necessary to coordinate the way collected sorted waste is recycled.
The Natural Resource Tax rate grew in several sections in 2020. The additional EUR 11 million collected from it was used by the Cabinet of Ministers to allocate funding for VARAM and Ministry of Culture. The EUR 8.8 million provided to VARAM was used to finance the Integrated Approach to Resource Management, maintenance of Salaspils nuclear reactor, as well as various nature unrelated goals.