EPR is a policy instrument that makes producers accountable for their products’ environmental costs and impacts. However, not everyone is on board with EPR.
Many manufacturers and policymakers have been debating the concept for a long time, with some viewing EPR as a tax, a penalty, or a burden that unfairly targets certain sectors or products.
The truth is EPR (Extended Producer Responsibility) is not a tax but rather a fee that holds producers responsible for the environmental impact of their products throughout their entire lifecycle.
This blog will clear up this common misunderstanding and explain why EPR is not a tax but a way of promoting environmental protection and resource conservation. I will also give you tips on complying with EPR regulations and reducing your fees.
What Exactly is EPR
Think of EPR as a concept that puts the responsibility on producers for what happens to their products throughout their lifecycle. Traditional manufacturing and consumption systems often focus on creating and selling products with little thought about what happens when those products reach the end of their useful life.
So, EPR programs aim to shift the burden of consumers and governments recycling to the producers themselves. It’s all about ensuring that those who create and profit from products also take responsibility for managing their impact on the environment and society.
This means that producers have to pay fees to cover the costs of collecting, recycling, or disposing of their products or packaging after they are used by consumers.
But is this fee a tax? Let’s find out
Is EPR Considered a Tax?
First off, let’s think about the purpose of a tax. Taxes are primarily used to generate revenue for the government, which is used to fund various government programs and services, such as infrastructure, education, and healthcare.
In the case of EPR, while fees are collected from producers, the main goal is not to generate government income but to promote sustainable practices and encourage producers to manage their products responsibly.
The fees collected from producers are intended to support the costs associated with managing and recycling products at the end of their life cycle. This includes establishing recycling infrastructure, public awareness campaigns, or even research and development in sustainable technologies.
So, regarding purpose, EPR doesn’t quite align with traditional taxes.
It’s also worth mentioning that EPR fees are typically tied to the specific products the program covers. This targeted approach differs from broad-based taxes that apply to various activities or income sources.
Considering all these factors, it’s clear that despite EPR sharing some similarities with taxes, It ultimately serves a different purpose and cannot be classified as a traditional tax.
Who is Affected By EPR Fees?
Your company may need to pay EPR fees if you are a producer of packaging or other products that are subject to EPR regulations in the country where you operate.
The definition of a producer may vary depending on your country and the product, but generally, you are liable to EPR fees if you.
- Supply packaged goods to the market under your own brand
- Place goods into packaging that is unbranded when it is supplied
- Import products in packaging
- Own an online marketplace
- Hire or loan out reusable packaging
- Supply empty packaging
You may also need to meet certain thresholds, such as annual turnover or tonnage of packaging, to be obligated under EPR.
For example, in the UK, you need to have an annual turnover of £1 million or more and be responsible for more than 25 tonnes of packaging in 2022 to be affected by EPR for packaging.
If you need clarification on whether any of this applies to you in your country, you should always consult with national authorities or compliance schemes in your country to check if you need to pay EPR fees and how much they will be.
Different countries have different EPR systems and fee structures, Here are some resources that can guide you
Germany – You can use the Recycling Dual calculator to estimate your EPR fees for packaging in Germany.
Japan – https://www.jcpra.or.jp/english/tabid/603/index.php
Europe – https://environment.ec.europa.eu/topics/waste-and-recycling/packaging-waste_en
United Kingdom – You can use the Report packaging data service to report your packaging data and calculate your EPR fees for packaging.
Other Countries – https://one.oecd.org/document/ENV/WKP%282021%2916/en/pdf
How Are EPR Fees Calculated
The way EPR fees are calculated depends on where you are and what kind of products you make or sell, but there are some common factors that affect the fees:
- Quantity of packaging or other materials used: The more you use, the more you pay. This is measured by the weight or volume of the materials.
- Packaging or other materials you use: For example, plastic is usually more expensive and harmful than paper, so that plastic packaging will have a higher fee than paper packaging.
- Quality of packaging: Some packaging or materials are easier to recycle or reuse than others or have less environmental impact. For example, if you use recyclable packaging, you will pay a lower fee than if you use packaging that is single-use or hard to dispose of.
These factors are used to modulate the fees, with the aim of rewarding companies for using less non-recyclable packaging or materials,
How Are The Fees Calculated?
To calculate your EPR fees, you need to track how much and what kind of packaging or materials you use for your products and report this to a compliance scheme or a national authority that will charge you the fees based on their rules and rates.
As mentioned earlier, the fees may change over time as the rules and rates are updated.
Let’s take a look at the United Kingdom again as an example.
Let’s say you are a producer of bottled drinks in the UK, and you want to know how much EPR fees you will have to pay for your packaging in 2023. Here are the steps you need to follow:
Step 1: First, you must collect and report data about your packaging, such as the type, class, material, and weight of the packaging you use for your drinks. You also need to report whether your packaging is household or non-household and whether it is reusable.
Here is a guide on how to collect such packaging data in the UK
Step 2: Next, you need to multiply the weight of each type of packaging by the corresponding fee rate for that type of packaging. The fee rates are set by the government, or a compliance scheme, and they are modulated according to the environmental criteria of the packaging.
For example, if you use 10 tonnes of recyclable plastic bottles with 30% recycled content, and the fee rate for this type of packaging is £150 per tonne, then you need to multiply 10 by 150 to get £1,500. You need to do this for all types of packaging you use.
Step 3: Then, you need to add up all the fees for each type of packaging to get your total EPR fee for your packaging. For example, if you also use 5 tonnes of cardboard boxes that have a fee rate of £50 per tonne, then you need to add £1,500 and £250 to get £1,750. This is your total EPR fee for your packaging.
Remember that this is just an illustration, and the actual fees may vary depending on the country and the product.
How Do I Pay The EPR Fees?
To pay the EPR fees, you must register with a compliance scheme or a national authority responsible for collecting and managing the fees in your country.
You also need to report your packaging or product data to them so that they can calculate your fees based on their rules and rates. You then can agree to a payment plan with them, which is usually regular (such as monthly, quarterly, or annually).
And the payment methods may vary depending on the scheme or authority, including online payments, bank transfers, direct debits, or invoices. The fee goes directly to the compliance scheme or the national authority you register with.
Can My Company Apply For an Exemption From EPR Fees?
Your company may be able to apply for an exemption from EPR fees in some cases, depending on the country and the product. However, exemptions are usually rare and subject to strict conditions.
You may be exempted from paying the EPR fees If you;
- A small producer that does not meet the turnover or tonnage thresholds for EPR obligations.
- Participate in a voluntary take-back or recycling scheme that meets or exceeds the EPR requirements.
- Export your products to another country where EPR fees are already paid.
- Use packaging that is exempt from EPR fees, such as packaging for medical products or hazardous substances.
Always check further with your country’s national authorities or EPR compliance schemes to see if you qualify for any exemptions and how to apply for them.
To conclude
EPR is not a tax but a policy instrument that aims to internalize the environmental costs of products and packaging throughout their life cycle. These fees are not paid to the government but to compliance schemes or national authorities that use them to fund and operate the waste management and recycling system.
By following EPR rules and adopting more green practices,
you can not only avoid trouble，and help create a circular economy， but also gain benefits，
Create a good image for your business and thus boost your business’ sales, as most consumers would still like to trust a more socially responsible business.
