A summary of international tax measures
The proliferation of plastic waste, much of which accumulates in landfills, waterways, and the oceans, poses devastating threats to the climate, the environment and biodiversity. Once plastic products become waste, they are a challenge due to their complex end-of-life management: only a portion can be recycled and, if the collection is not managed correctly, what remains may be released into the environment resulting in environmental degradation. And the production of plastic itself is one of the most greenhouse-gas emission-intensive industries. These are among the factors that have spurred some governments around the globe to action.
The lens on plastics
The European Union (EU) has been at the forefront of the “war on plastic” and has issued a multi-pronged response to urgent demands for a transition to sustainability from institutions, the general population, and the business community, as well as a viable path to carbon neutrality.
The EU’s Circular Economy Action Plan, first released in 2015, contained legislative and non-legislative actions designed to drive the EU’s transition to a circular economy. (A circular economy is one in which resources are used as long as possible, then recovered and recycled, as opposed to a “linear” economy where resources are created, used, and then disposed of.) The circular economy package was subsequently updated in 2022.
The EU aims to become a promoter of economic growth that ensures the containment of the negative effects linked to the use of natural resources and reverses the current system of development through an industrial reconversion that triggers circularity of goods and reuse of resources. In effect, a transformation in the way products are designed, manufactured, consumed, and recycled, eliminating the traditional linear production of goods in favour of a new economic model able to regenerate growth.
Other EU initiatives to reduce plastic waste and the use of plastic in packaging, and to increase awareness of industries and citizens of how to use plastics more sustainably, include:
The EU’s focus on plastics includes curbing the environmental impact of the packaging supply chain, in particular, the release of plastic packaging into the environment and its inability to biodegrade and/or be recycled. With a series of regulatory constraints on the horizon, the use of plastic packaging will change profoundly.
Packaging: the new EU policy
The cornerstones of the EU’s policy to mitigate the environmental impact of plastic packaging and promote the effective recycling of packaging materials is based on several linked actions:
These are summarised below.
How to prepare for change
The initiatives to move from the grip of a “plastic economy” to one of sustainability can be valuable opportunities for businesses that are willing to embrace them. Businesses that can adapt in time and avoid potential economic and business risk burdens may also benefit from some competitive advantages.
To this end, companies operating in global markets should assess, verify and, where necessary, reconsider the following:
Meanwhile, businesses should monitor developments relating to plastic packaging carefully to understand potential new obligations and help safeguard the environment. These steps will require procuring specific expertise in the packaging sector, tax advisers, customs experts, materials scientists, and consultants with expertise in environmental law.
While the EU and other jurisdictions have begun the implementation of volume-based taxes and levies on the importation and use of certain consumer plastics, the regulatory framework in Canada between the federal and provincial governments is more fragmented.
Nevertheless, the federal government is working with provinces, territories, and industry to set an ambitious collection target of 90% for recycling plastic beverage bottles, developing regulations to require that certain plastic packaging contain at least 50% recycled content, and establishing clear rules for labelling recyclable and compostable plastics.
|Effective dates of the prohibitions
|Manufacture and import for sale in Canada
|Manufacture, import and sale for export
|Checkout bags, cutlery, foodservice ware, stir sticks, straws
|20 December 2022
|20 December 2023
|20 December 2025
|20 June 2023
|20 June 2024
|20 December 2025
|Flexible straws packaged with beverage containers
|20 June 2024
|20 December 2025
In addition, Canada’s provinces are at varying stages in the implementation of packaging taxes and recycling levies. For example, Ontario, the largest/most populous province, is introducing the “Blue Box Regulation,” which will impose a volume-based levy on paper, glass, metal, and plastic packaging imported and used in the province, although certain exemptions will exist on a revenue- or volume-tested basis.
As the provincial-level tax regimes and rules differ, it will be important for producers to assess and re-assess the volume of plastics and materials imported into Canada and into each province, to arrive at a risk-informed approach to registration and compliance.