Background
The background for the tax was an acute lack of landfill sites, especially in the greater Copenhagen area, and problems with dioxin emissions from incineration.
Introduced
1 January 1987
Aims
The tax was also meant to support the Action Plan for Waste and Recycling. The target of this was a recycling rate of 54% to be achieved by 1996. The purpose of the tax is also to increase the proportion on waste managed by techniques towards the top of the waste management hierarchy. The waste disposal tax has been a very important instrument and has lead to significant increase in recycling, as well as a significant decrease in the amount of waste landfilled. Only 15% of the total waste generated was landfilled in 1997. No increases in illicit dumping of waste has been reported since the charge was introduced (COWI, 2001: 223). Another aim of the tax is to promote incineration over landfill (Nordic Council, 2006).
Design
The waste tax applies to both household waste and industrial waste. It is a weight-based tax that is levied on all solid waste delivered to or processed at landfills and incinerators. Waste that is reused or recycled is not liable to the tax. There is also a general reimbursement mechanism so that the tax is refunded for waste that is removed from registered waste sites, e.g. for construction and building materials.
Tax Rates
Initially the rate for landfilling and incineration was the same, but since 1993 it is differentiated (with a higher rate for landfilling). In 1997 the rates were increased substantially, the rate for landfilling became DKK 335 (about 45 euros) per tonne (Bartelings et al., 2005).
Since 2001 the waste tax has remained at the current rates: DKK 375 per tonne of landfilled waste (50.5 euros) and DKK 330 per tonne of incinerated waste (44.4 euros). There is no tax on recycled waste. Exemptions exist on hazardous waste, contaminated soil and waste tractions covered by statutory order on biomass waste (from A1.3.3 Regulation, 2005-2008 Waste Strategy) (Danish Government, 2004 and Nordic Council, 2006). In 2000 the charges differed: 280 DKK for incinerated waste with energy recovery and 330DKK for incinerated waste without energy recovery (COWI, 2001). This differentiation was removed in 2001 (Nordic, 2006).
The rates of tax as applied to waste materials are compared below:
- Waste delivered to landfill sites: DKK 375 (€50.31) per tonne
- Waste delivered to electricity production plants: DKK 280 (€37.56) per tonne
- Waste delivered to different types of incineration: DKK 330 (€44.27) per tonne
Table waste rates 1987 - 2005
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DKK (euro)/tonne
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1987 (intro'd)
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1993
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1997
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1999
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2003-2005
|
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Incineration with energy recovery
|
40 (5.1)
|
160 (21.1)
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210 (28.1)
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280 (37.7)
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330 (44.4)
|
|
Other incineration
|
|
|
260 (34.7)
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330 (44.4)
|
|
|
Landfill
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40 (5.1)
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335 (44.1)
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335 (44.8)
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375 (50.4)
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375 (50.5)
|
|
Landfill of residual waste (slag and fly ash)
|
|
|
|
210 (28.4)
intro. jan 1998
|
|
Source: Nordic Council, 2006: 74.
Administration
Although the tax is ideally a weight-based tax, municipalities have the autonomy to implement it as a flat fee, or volume based. As the case studies of the towns of Tinglev and Bogense in this entry show, weight based is more effective.
Use of Revenues
The revenue is not recycled but goes to the treasury.
Scope
The scheme was pioneered in Tinglev and Bogenese (Cooper et al., 1999: 6). Specially designed vehicles weigh the refuse, which is left in 240 litre bins by each household. Each bin is designed to hold 40% compostable materials, 60% for remainder. The new charge did not increase prices of refuse collection, i.e., if a households refuse remained constant, the charge remained the same (Cooper et al., 1999: 5.23).
Achievements
Overall, there has been a 26% reduction in net solid waste from 1987 to 1998 (Andersen and Dengsoe, 2002) and an overall recycling rate of 61% was achieved. The successfulness of this result is not just due to the waste tax but also due to the introduction of a comprehensive waste reduction policy with several elements. The construction of new recycling facilities were responsible for more than 80% of the reduction in waste, such that construction materials and garden waste were now recycled as opposed to landfilled Bartelings et al., 2005). In the case of construction materials, the waste tax may have been especially important in promoting recovery and reuse. Overall, municipal waste authorities were more responsive to the waste tax than were corporate and institutional leaders, which is surprising as the former are in a position to simply pass the tax on to local residents (Bartelings et al., 2005:11). Andersen (1998) suggests that this maybe due to the fact that waste management is the primary focus of municipal authorities, whereas for most firms and institutions it is a side issue that attracts limited attention from top management (Bartelings et al., 2005).
Comparing weight based to other methods, in the towns of Tinglev and Bogenese residual waste has been reduced to approximately 100kg/head/annum compared to an average in other towns of 200-300kg/head/annum., and recycling has increased. Fly-tipping is not a problem (Cooper et al 1999: 6). There has been a 15-20% reduction in weight of refuse collected and households responded to the opportunity to reduce bills by increased recycling efforts. Economic analysis is needed to discover if savings on incineration and landfill offsets the cost of equipment.
Dengsoe and Andersen (1999) report that the amount of taxable waste delivered at municipal waste treatment plants (landfills and incineration plants) decreased by at least 0.5% from 1996 to 1998 despite both the large increase in waste tax rates in 1997 and the fact that more types of waste became taxable as well as the fact that economic growth was strong at 7% (Bartelings et al., 2005). Dengsoe and Andersen (1999) also noticed that due to the significant differentiation in tax rates between landfilling and incineration, that incineration had become a popular alternative to recycling. "Householders did not have a financial incentive to increase recycling, because the waste tax was not reflected in the waste collection fees. This lack of transmission of the price signal of the waste tax in financial transactions in the waste sector, especially households, was assessed to constitute one of the decisive barriers to a decrease in the taxable waste amounts" (Bartelings et al., 2005: 12).
Performance
From 1987 to 1993, the main decline was in building waste (-64%) and household waste (-16%), whereas waste from private enterprises increased (+8%) and mixed waste decreased (-22%) (RENDAN, 1996). From 1994-1998, the overall growth of waste was stable, despite a high rate of growth in production and consumption. Household waste and building waste declined further (-7% and -25% respectively), while waste from private enterprises and mixed waste increased (+12% and +19% respectively) (ISAG, 1999) (Andersen and Dengsoe, 2002). In 2001 revenue from the waste tax exceeded DKK 1 Billion (DEPA, 2004). In 1998 the waste tax raised DKK 889 million (COWI, 2001).
The total volume of waste, divided between forms of treatment, is shown in the table below:
Volumes of waste in 2001:
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Recycling
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Incineration
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Landfilling
|
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2001
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8101 tonnes (63%)
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3221 tonnes (25%)
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1317 tonnes (10%)
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Source: Danish Government, 2004: 103.
The majority of waste was recycled in 2001. A major reason for this is considered to be the financial incentives provided by the waste tax, such that large savings may be made through recycling.
Effects from the waste tax on the incentives in the waste production and treatment system. The three largest waste segments.
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Household waste
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All households are obliged to hold and to pay a fixed price for a rubbish bin. The local municipality is responsible for managing the waste collection and for paying waste tax. A fixed price per year is charged (not based on the quantity of waste produced) to the individual households, they are not allowed to free themselves from the burden of the tax.
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Industrial Waste. Not including environmentally problematic waste
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Reduction of waste production or increase of recirculation is complicated and costly to implement. The size of the waste tax is small compared with this. Experiences documented in empirical studies seem to show that changed performance in waste treatment in industrial companies can mainly be explained by a combination of offering consultancy services to the companies and using bureaucratic regulation. The waste tax seems to be of minor importance.
|
|
Construction sector waste
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Important recirculation possibilities, but depends upon the presence of plants for treatment and manufacturing of materials useable in new production processes. Experiences documented in empirical studies suggest that bureaucratic regulation allow for low tax rate payment by the construction sector, therefore the effects of the waste tax are small.
|
Source: Christoffersen and Svendsen, 2000, Table 2: 13.
The desired effect of the waste tax would be better achieved were a variable tax rate based on weight of waste production for households charged. According to Christoffersen and Svensen, 2000, reductions in waste from the industrial and construction sectors' would be better facilitated by adapting voluntary agreements between these industries and the municipalities as well as improving administrative regulation. Greater detail on weight-related collection schemes for household waste is available in an EEA, 2002 publication.
Revenue from waste tax (million DKK)
|
|
1990
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1995
|
2000
|
2002
|
2005
|
|
Waste Tax
|
404
|
619
|
999
|
1090
|
983
|
Source: Nordic Council, 2006: 84.
A survey by Denmark's environmental protection agency has found that household waste generation is "slowly but surely" falling. It dropped 16%, from 1979 and 10% from 1992, to 515kg per household per year in 2001. Household waste generation rose over the same period in most EU countries. Denmark's downward trend was most pronounced in recyclable materials such as paper, cardboard and glass; food waste volumes remained constant; use of disposable nappies increased markedly. The results appear to demonstrate the efficacy of collection and recycling regulations, the EPA says (ENDS, Feb 10th 2004).
Related Instruments
PVC Waste Tax: since July 1, 2000 Denmark has levied environmental taxes on commodities made from PVC and on phthalates, the plasticizer in PVC. In 2002 certain products of rigid PVC were exempted from the PVC-tax (OECD, 2004: 94). Beer and soft drink packaging deposit-refund system. This is supported by taxes on packaging containers for all drink products. Tax on disposable tableware (introduced before the waste tax). Raw material tax to limit the use of sand and gravel and support the reuse of building materials for construction.
Heat from waste tax (affaldsvarmeafgiften) is a tax levied on the heat produced from district heating systems via waste incineration. This tax has been in force since January 1999. The tax was introduced to ensure that incineration of waste was not favoured tax wise over use of conventional fuels as waste incineration plants are exempt from the CO2 tax. The rate in 2003 was 12.90 DKK/Gj of heat measured or 110DKK per ton of waste if heat is not measured. Other rules apply for plants when they combine waste with other fuels to produce heat (see www.retsinfo.dk). Often the tax is passed on by incineration companies to the waste producers (Nordic Council, 2006).
References
Andersen, M.S., 1998, Assessing the Effectiveness of Denmark's Waste Tax, Environment, 40(4), May 1998: 10-15 and 38-41.
Andersen, M.S., Dengsoe, N., 2002, A Baumol-Oates approach to solid waste taxation. Journal of Material Cycles Waste Management, Vol. 4, 23-28.
Bartelings H., P. van Buekering, O. Kuik, V. Linderhof, F. Oosterhuis, 2005, Effectiveness of landfill taxation, report prepared for the Dutch Ministry of Housing, Spatial Planning and the Environment, Institute for Environmental Studies, Vrije Universiteit, Amsterdam. Available at
www.ivm.falw.vu.nl/research_output/index.cfm/home_subsection.cfm/
subsectionid/FF91BCBD-EAFE-426A-ABB8184073A39BBF
Christoffersen, H. and G. Svendson, 2000, Bureaucratic Tax-Seeking: The Danish Waste Tax, paper presented at the Public Choice Workshop II (December 1, 2000), Aarhus University. Available at: www.hha.dk/nat/wper/00-8_gts.pdf
Cooper, J., Jones, P., Powell, J., and Knight D. Scott, 1999, Environmental Economic Instruments, ‘The Landfill Tax - A Constructive Use of a Green Tax?', IBC UK Conferences Limited, December 1999, Ch. 5: Environmental Services, pp5.23
COWI Consulting Engineers and Planners AS, 2001, Environmental Factors and Health, The Danish Experience, for DEPA. Available at http://www.mst.dk/udgiv/Publications/2001/87-7944-519-5/pdf/87-7944-518-7.pdf
Danish Government, 2004, Waste Strategy 2005-2008, Minister for the Environment, Copenhagen. Available at: http://www.mst.dk/udgiv/homepage/
ENDS, Feb 10th, 2004.
European Environmental Agency (EEA), 2002, Case Studies on waste minimisation practices in Europe, Topic Report 2/2002: Denmark: Weight-related collection schemes for household waste, Annex 1, Copenhagen. Available at http://reports.eea.europa.eu/topic_report_2002_2/en/Topic_report_2-2002_web.pdf
RENDAN, 1996, The Waste handbook 1996, Copenhagen ISAG.
Miljostyrelsen (Danish Protection Agency), 1999, Waste statistics 1998.
Nordic Council, 2002, The use of Economic Instruments in Nordic Environmental Policy 1999-2001, TemaNord 2002:581, Copenhagen. Available at
http://www.norden.org/pub/ebook/2002-581.pdf
Nordic Council of Ministers, 2006, The Use of Economic Instruments in Nordic and Baltic Environmental Policy 2001-2005, TemaNord 2006:525, National Environmental Research Institute, Denmark.
OECD, 2004, Addressing the Economics of Waste, PVC Waste in Denmark - Costs and Benefits of Altenative Treatments, OECD Environment & Sustainable Development, vol. 2004, no. 2, 93-111. Available at: http://www1.oecd.org/publications/e-book/9704031E.PDF
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