Business Organisations Categorically Against Packaging Tax
Estonian Chamber of Commerce and Industry, Estonian Food Industry Association, Estonian Traders Association, Federation of Estonian Chemical Industries, Estonian Soft Drinks Producers Association and Estonian Breweries Association are categorically against the planned excise duty on bringing packaging to the market.
The said organisations have previously sent to the Ministry of Finance a number of comments, notations and proposals on the planned packaging excise duty, but unfortunately these arguments have not been taken into account in drafting the act.
The business organisations are still convinced that the packaging excise duty on bringing packaging to the market does not serve its main purpose, i.e. does not help to decrease the quantities of packaging placed on the market. Companies have no real opportunity to decrease the quantity of packaging to a significant extent, because the packaging is already optimum and/or Estonian companies have no possibility to influence the packaging quantity.
It is unclear how the Ministry of Finance has come to the conclusion that Estonia brings too much packaging to the market or that too much packaging is used in Estonia. The development intent and explanatory memorandum of the draft act lack reliable evidence that would confirm the problem.
Companies that are currently honestly declaring packaging spend in total approximately 12 million euros a year on collecting and recycling packaging and packaging waste. As a result of the additional packaging excise duty, the annual costs would rise for the entrepreneurs twice or by approximately 15-20 million euros. In our opinion, there are a lot of entrepreneurs already now who do not fulfil their legal obligations related to handling of packaging, but the number of these entrepreneurs may increase significantly if additional excise duty is imposed. In the opinion of the business organisations, one of the main reasons for that is weak supervision. The Environmental Inspectorate and the Tax and Customs Board do not check the data on placing packaging on the market and recycling of their waste sufficiently. The National Audit Office as well as the business organisations have already highlighted the problem, but the proposal to improve supervision, has unfortunately not been taken into account in previous years.
The business organisations disapprove the practice of the Ministry of Finance, which has prevailed during the recent months, where processing of important tax amendments takes place in haste and without analysis. As a result, it is not possible to observe the Rules for Good Legislative Practice and Legislative Drafting, there are significant deficiencies in impact analysis and in summary, the quality of the draft act leaves much to be desired.
Additionally, the representatives of entrepreneurs have sent several questions regarding the impact of packaging excise to the Ministry of Finance as well as the Ministry of the Environment, but the ministries have not considered it necessary to reply to the questions in four weeks. At the same time, the Ministry of Finance gave the business sector only four working days to express their opinion on the draft act.
In conclusion, the business organisations think the draft act is unjustified and hastily prepared and are categorically against it. Instead of establishing the excise duty, national supervision over handling of packaging should be made more efficient in order to ensure honest competitive environment, which in turn would enable increasing tax collection for the state budget via the already existing system.
Read the joint position of business organisations here.