Waste Disposal Tax with Refund Criteria (Catalan Municipal Solid Waste disposal tax)
Waste Agency of Catalonia- ARC (Agència de Residus de Catalunya, Departament de la Gestió de la Matèria Orgànica)
Contact: Francesc Giró
Address: C/Dr. Roux 80, 08017 Barcelona, Spain
Phone: +34 935 673 300
WHERE: Catalonia (Spain)
WHEN: 2004 – present (ongoing)
WASTE MANAGEMENT HIERARCHY: Prevention: Replacement – Reduction, Disposal: Rectiﬁcation – Return – Waste Export TYPE OF INSTRUMENT: Regulatory/normative
WASTE STREAMS: Municipal waste, Organic residues (garden waste), Cardboard, Food and organic waste
About: Despite not having a national landfill tax, the Article 16 of the Spanish Waste Act allows waste authorities from different autonomous communities (regions) to apply economic incentives, in order to promote waste prevention and separate collection, including the introduction of landfill and incineration taxes on municipal waste. These premises encouraged Spanish regions to create their own taxes.
In an effort to divert waste from landfilling and incineration, Catalonia region introduced, in 2004 and 2008, the landfill and incineration taxes, in parallel with making investments in waste infrastructure and separate collection schemes out of tax proceeds.
The Catalan Municipal Solid Waste disposal tax is the only tax in Europe that affects municipal solid waste, allowing the return of the revenue to taxpayers, according to their waste performance.
Photo Source: Waste Agency of Catalonia- ARC
1. To discourage landfilling and incineration of MSW, in accordance with and also by reinforcing of the European Waste Management hierarchy, by penalizing them economically.
2. To create a twofold incentive for the separate collection and recovery of waste streams, on the one hand, by making disposal more expensive, and on the other hand, by creating reve-nues for the local authorities by diversified refunds for separate collection.
3. To generate revenues for the Catalan Waste Management Fund – the most important instru-ment for the financing of waste management infrastructure and strategy.
Key aspects that are background activators for the BEST PRACTICE
Reducing the volume of landfilled waste and implementation of EU Circular Economy Package represent a priority for Catalonia region, as stipulated by PRECAT 20 – General Program for Waste prevention and management and resources in Catalonia 2020:
• Promoting the consideration of waste as resource
• Preventing climate change
• Soil protection and improvement
• Waste prevention
• Promoting preparation for reuse
• Increasing material recovery with view to circular economy
• Abandoning gradually landfilling and incineration of recoverable waste.
• Reduction of 50% food waste (reference year 2010 in retail, catering and households)
• Material recycling: 60% in weight of bio-waste in 2020
• Biowaste: contaminant materials <10 % in 2020.
These objectives and targets can be realized by continuing the strategy started by Catalonia’s authorities with respect of decreasing the rate of municipal waste disposal and incineration. The increasing taxes made possible the development of such strategy.
Photo Source: Regions4recycling.eu
In the same time, at least 50% of the revenue generated by the disposal tax had to be allocated to biological treatment of bio-waste and mechanical-biological treatment of residual waste, while the remaining revenue is refunded to the local authorities according to their performance regarding separate collection of bio-waste.
In order to enforce the implementation of separate collection of bio-waste or the promotion of home and community composting from 2009 to 2016 municipalities, that had not presented a corresponding implementation plan, had to pay an increased tax rate.
1. Knowhow: expertise of Waste Agency of Catalonia (ARC), which created a sustainable and operational waste management scheme.
2. Funding, budget: a very important aspect of this practice is that it is sustained only from own generated proceeds.
3. Material: The revenues obtained out of disposal tax are used for MSW treatment and recycling, based on performance criteria.
4. Human resources: Administrative team, involved in enforcement and control
A great number of municipalities have initiated and/or intensified their effort to implement separation collection at source and separate collection of waste
streams due to the tax incentives and the refunding of the revenues.
An important indicator of environmental impact of disposal tax is the number of municipalities in Catalonia implementing separate collection of biowaste (Catalonia having 947 municipalities):
- From 1996 to 2003 (before the landfill tax was introduced), a yearly average of only 17 municipalities started separate collection of biowaste.
- From 2004 to 2010 (after the landfill tax was introduced), the yearly average increased to 79 municipalities. This development indicates that the tax has acted as a strong incentive for local authorities to handle the biowaste in more sustainable way.
- In December 2016, 766 municipalities out of 948 had introduced separate collection of biowaste.
Revenues from municipal waste tax developed as follows:
• Landfill tax: from 32.16 M EUR (2004) to 26.84 MEUR (2016)
• Incineration tax: from 3.48 M EUR (2009, as before no such tax applied) to 5.88 M EUR (2016).
However, even though the revenues from the landfill tax decreased, they reflect a favorable evolution of waste management:
– increased separate collection of recyclable materials
– more residual waste being treated (mechanical-biological treatment)
– trend to decrease the total generated municipal solid waste.
The landfill and incineration taxes have been focused in the past on municipal solid waste, whereas industrial waste is subject to these taxes since the beginning of 2014.
• Total amount of MSW: since 2004 (when landfill tax has been introduced), the rate of separate collection grew from 22.6% (2003) to 39% (2016).
• Organic fraction of municipal waste: separate collection of biowaste grew from 3.8% of the total MSW to 10.1% of the total MSW in 2016.
Photo Source: Waste Agency of Catalonia – ARC
The disposal tax has been introduced in order to divert waste from landfill (especially biowaste), to reduce the generated waste and support recycling initiatives. Considering Catalonia’s results after implementing this tax, its purpose has been reached, mainly after linking the tax with the incentive component.
Through the implementation of disposal tax, it became easier to implement the separate waste collection of all waste streams, from recyclable waste to biowaste.
The amounts raised through disposal tax system can be used for a wide range of waste management purposes: e.g. schemes to prevent/reduce waste, research & development, waste enforcement and education campaigns. These schemes have to be correlated to the specific of every municipality and region, starting with the schemes with greatest impact on environment and that can be easier to implement.
By proper use of proceeds resulting from disposal tax, many activities specific to the circular economy can be encouraged, also considering the principles of waste hierarchy (mainly focusing on waste prevention).
The prevention of food waste (as an important part of biowaste targeted by this practice) not only has an economic impact (resulting in economic losses of 841 M EUR in Catalonia in 2010), but has a social and ethical impact (considering 1 Billion people suffer from hunger worldwide) and an environmental impact (GHG emissions counted 520.700 tonnes of CO2 in 2010 in Catalonia – equivalent of emissions from 20.300 motor vehicles throughout their working life).
The Life-cycle-thinking of biowaste problem, encouraged by ARC, makes possible the solving of limited conditions of Catalonia region. In this way, problems like poor soils, erosion and desertification can be overcome through separate collection, biological treatment and use of fertilizers resulted from biowaste.
The practice was innovative in Spain, due to it double approach – on one hand, discouraging the municipal waste disposal or incineration, and on the other hand, by incentivizing separate collection and recycling.
However, similar disposal taxes were implemented long time before in other
countries (e.g. in Flanders region from Belgium disposal tax has been applied since 1980).
An important achievement to be mentioned is ARC’s merit of persuading holders of municipal solid waste disposal plants (landfills and incinerators) to be partners in this program and to support it.
In similar cases of implementing the tax in other countries from Europe they were the most active opponents of the measure and even there were some cases when they tried to sabotage it.
Engaged participatory processes
The project was initiated by Waste Agency of Catalonia (Agencia de Residus de Catalunya – ARC) – a public company within the Department of Planning and Sustainability of the Government of Catalonia but it would´t been so successful without the support of the most relevant stakeholders in the field:
• Department of Planning and Sustainability of the Government of Catalonia
• Local authorities (municipalities and associations thereof) in their role of tax payers and beneficiaries of refunding
• Holders of municipal solid waste disposal plants (landfills and incinerators) in their role of tax collectors.
Before implementing the program ARC organized regional conferences addressed to local authorities regarding the technical and financial aspects of the landfill and incineration tax.
No initial investment is needed for these kind of practices (as the disposal tax is a financial instrument by itself), therefore it can be easily implemented by European municipalities and regions.
Other disposal tax schemes have been implemented in
other European regions, as identified under R4R-project-Regions4Recycling:
•Ireland:Limerick/Clare/Kerry Region (initiated by Southern Regional Waste Management Office): www.srwmo.ie
• Belgium: Flanders region (initiated by Public Flemish Waste Agency (OVAM): www.ovam.be
The dual system of disposal tax and refunding implemented in Catalonia is one of the best examples of how such activity operates under sustainable development principles.
By making an accurate assessment of initial situation and industry needs, then by applying proper legal regulations and enforcement, the entire operating flow functions with own generated funds.
Statistics show that the Municipal Solid Waste disposal tax has contributed in all countries where it has been adopted in increasing recycling, recovery and reducing waste disposal.
It is an indispensable, simple, effective measure that can no longer be postponed and which should become mandatory in all European countries and beyond.
Over the years, the separate collection rate has been closely monitored and there is statistical evidence from time series reflecting the increase of separate collection, reduction of residual waste going directly to landfill or incineration (evolution), as well as comparison of landfill data of municipalities in different stages of deployment of the separate collection of bio-waste (benchmark). Expert judgement helped to interpret the impact of new instruments involved and external factors over time.
The main success factors prove to be:
• A waste disposal tax has to be allocated for the funding of waste management strategies and infrastructure.
• The refund scheme has to channel revenues back to local authorities and encourage separate collection and recycling performances.
• The linking of refunding with quality criteria for biowaste improves substantially the quality of the input streams, and subsequently, the compost obtained.
The way Catalonia applied the disposal tax with refunding scheme proves its effectiveness. Over the years, the funding scheme has been used in a dynamic way, being adjusted according to evolution of revenues (which decrease, as less residual waste is going to landfill and incinera-tion) and the refunding needs for separate collection infrastructure and recycling.
E.g. as of 2014, home and community composting in Catalonia were supported by refunding scheme, whereas subsidies for the already well established separate collection of paper and cardboard had to be cut down (also considering municipality could obtain revenues from sell-ing these materials.
1. Attempts to avoid the payment of the disposal tax by classification of municipal waste as industrial waste. This requires well established control mechanisms for the waste flows.
2. There was also a certain tendency to deliver large amounts of biowaste to biological treatment plants, which turned out to be highly contaminated. This made necessary to link the refunding for biowaste to strict quality criteria. Refund is only paid for biowaste with a contamination rate of <15%. The amount per tonne of biowaste delivered to biological treatment plants diminishes as the impurity rate rises.
3. The reduction of municipal solid waste going to landfill and incineration over the last years resulted in smaller revenues from the disposal tax. This led to decreased funds to improve separate collection and recycling. The solution consisted in an increase of the tax in 2011. Further important progressive increments up to about 48,00 EUR/t in 2020 are approved.
4. Another challenge was the application of the incremented tax rate when municipalities form part of an association of municipalities (e.g. County Council) that jointly manage their municipal solid waste.
5. The control of the correct payment and refunding of the tax requires an administrative workload for local and regional administrations that should not be underestimated.