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Tax my plastic, please?

08 May 2019 | OP ED Watch

The Canadian Taxpayers’ Federation says no, specifically to a proposal in a report from Deloitte for Environment Canada that says one way to up the rate at which Canadians recycle plastics is to put a “tax or fee on virgin resins”. But as with carbon taxes, it’s important to be clear whether the objection is to taxation as a tool for discouraging undesirable consumption, or to the concept that the consumption in question is actually undesirable.

It’s no surprise the CTF objects to a plastic tax, since it objects to most taxes. It says the proposed levy on plastic is bad because it will make things more expensive, like the “hated carbon tax”. In high dudgeon they say “You would think that a government that’s looking out for ‘the middle class and those working hard to join it’ would be laser-focused on finding ways to make life more affordable. Instead, the Trudeau government seems to be working overtime to find ways to do the opposite. … It’s sadly predictable from a government committed to the perverse approach of constantly aiming to drive Canadians’ cost of living up, rather than down. It’s what you get when you try to use sticks rather than carrots to change people’s behaviour.”

Now hold on. Carrots and sticks both work and sometimes sticks are more effective and more honest. Indeed past a certain point the carrot-stick metaphor breaks down entirely with respect to government because what fundamentally distinguishes the state from any other entity in society is that it and it alone has a stick. Firms can only offer products, or jobs, at attractive prices. Government can make you do things by threatening to put you in jail if you don’t. Including pay the taxes necessary to offer subsidies and incentives. When governments subsidize instead of taxing they aren’t making us all better off. They’re just shifting the costs of a policy from one group to another and not always in desirable ways.

It is of course possible that recycling plastic isn’t desirable. Or that if a tax is introduced it will be bungled. But just because lots of government policy is based on faulty premises, or botched in practice, it doesn’t mean the theory behind it was wrong.

The real question here is whether recycling is good. If buying plastic and throwing it out imposes costs on others through “externalities” it is good policy to bring those costs home to those enjoying the benefits and a tax is very likely the right way to do it. (Charging people the full cost of disposing of their garbage would also work, if it didn’t prove an administrative nightmare.) And in large measure, as with the carbon tax, people who grant the premise look awkward disputing the conclusion. If a tax on “virgin resin” is bad, it’s because recycling isn’t a good idea in principle.

It's widely taken for granted that it is. But like most environmental matters, it’s more complicated than certain kinds of zealots make it sound. In fact the New York Times’ “Climate Fwd.” just took another quick break from beating the warming drum to take a thoughtful look at which kinds of plastics you really should concentrate on recycling. (Answer: #1, 2 and 5; there’s a good market for them. #4, 6 and 7 just get sorted out and put in landfills and #3 is even worse because it contaminates others. So the latter four should just go in the trash.)

Worse, much “recycled” material is actually shipped to Third World countries where unscrupulous operators burn or bury it, doing the environment little good or sometimes active harm. And Canada recently had an embarrassing confrontation with the Philippines over some supposedly recyclable material that was actually household waste and worse which a careless or unscrupulous operator here had shipped over there.

Here “Climate Fwd.” also misses an important economic point. If there’s a market for something you don’t need government programs and coercion because entrepreneurs will find a way to get hold of it and make money. And if there’s no market, it’s not real recycling, it’s just expensively self-deluding virtue signaling, and it would make more sense to focus on proper landfilling options, which are usually far less costly than recycling anyway because most garbage is, well, just garbage.

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