Companies raise red flags - Over environmental tax

The 20 per cent tax imposed on plastic materials, otherwise known as Environmental Tax has taken effect but not without some uneasiness from major plastic consuming and producing companies in the country. Maxwell Adombila Akalaare reports.

KEY plastic consuming and producing companies in the country are protesting the 20 per cent tax imposed on plastic materials.
The 2011 Budget and Economic Policy Statement of the government through which the tax was introduced  stated that the tax was meant "to protect the environment” and would be collected at “importation and any production or collection points" throughout the country.
But the plastic manufacturing companies disagree, they are  questioning the rational for railroading the 20 per cent charge on plastic material into the national tax policy.
In separate interviews with the GRAPHIC BUSINESS, sources within the Association of Ghana Industry (AGI) and other major plastic consuming and producing companies in the country have, however, challenged such an intend describing it as "misplaced" and “not meeting the tax' target.”
The Managing Director of Unilever Ghana, which now hosts the head office of Unilever's West African operations, excluding Nigeria, Mr David Mureithi told the GRAPHIC BUSINESS that the tax was "purely a revenue collection measure" rather than an environment one as had been indicated in the budget.

David Mureithi doubts if the Environmental Tax is a 'sin' tax

"Or is the government saying this environmental tax is a 'sin tax’, the MD asked. 
A sin tax is a form of punitive tax placed on products that are deemed unwanted by "society" and thereby aimed at discouraging or reducing consumption of the product.  
 He further wondered if funds to be generated through the tax would “go to the Ministry of Finance and Economic Planning or the Environmental Protection Agency for environmental purposes.”
The Managing Director was of the view that government should engage industry  on  how best to handle plastic waste and  “set up small enterprises that would be responsible for the recycling of these wastes”. He said that a legislative measure from local government authorities such as the assemblies on how to dispose plastic waste was more welcoming than the tax.
 “In the midst of this escalating global commodity prices, you can count on industry to pass on the effects of these price hikes and that of the 20 per cent tax onto the final products and the hardships that it would bring to them is not what industry wants”, he stated
A source within the AGI also told the GRAPHIC BUSINESS that the association was wondering why government is yet to make use of a committee's proposals on adding addictive -  Oxo-Bio Degradable Additives to raw materials used in manufacturing plastic bags that would cause them to desolve within 90 days once they were exposed to sun rays and the air after usage.
"This committee, made up of officials from the Ghana Standards Board, Plastic Manufacturers Association, the AGI and government officials contracted a UK-based bio lab company to carry out a research into the best ways of managing these materials. The committee submitted its report to the Ministry of Trade and Industry on July, 2009.
"We also advised government on a lot of measures to adopt towards solving this problem. See, we told   government  to pass a Legislative Instrument that would compel all plastic manufacturers and importers to make all their products bio-degradable. Once that is done, it compels all of them to meet this standard;  import or produce plastic materials that are only bio-degradable. We further stated that they should encourage establishment of  recycling plants by giving out incentives to entreprenuers to engage in recycling."
"So how come all these opportunities are there, they are not exploited yet all that government could do was to impose a 20 per cent tax on plastic materials?" the source asked.
 The Association of Ghana Industry, Ghana Plastic Manufacturers Association (GPMA),  the umbrella body of plastic manufacturing companies in the country, the Private Enterprise Foundation and some other business groupings in the country have, following the introduction of the tax late last November been spearheading negotiations with government on possibilities of  withdrawing the tax or reducing the rate.
The source however lauded government on its transparency and willingness towards the negotiations adding that those negotiations have led to government agreeing to limit the tax "to only soft plastic materials; polythene bags and the likes that mostly litter while excluding the hard ones that barely litter.  But this boils down to the same point; that the tax is not serving its purpose but rather a money making venture.”
Many companies at the receiving end of the tax are asking “if the tax is really meant to protect the environment as the government wants us to believe, then why exempt sachet water producers who are the worst pollutees of the environment with their products?”
Prices of plastic related wares in the country have already started pulling gone up. Several companies have have posted on their  entrances  telling their  prospective customers that “in view of the 20 per cent Environmental Tax being introduced, there would be price increases very shortly on all containers.”
Checks by the GRAPHIC BUSINESS within some key plastic consuming and producing companies in Accra indicated that most of these companies had restructured their internal expenses to capture the tax as tax agents at the ports last February started to  implement the 20 per cent at the importation of plastic products.
The National Security Advisor, Brigadier-General Nunoo Mensah ealry last week hinted to Citi FM, a private radio station in Accra that government was considering a ban on plastic water because of the waste it generates.
Plastic waste materials, mostly those from pure water sachets and polythene bags are currently competing for space in open gutters and virtually every available space nation-wide.
The plastic menace currently engulfing the country dates back to decades. As a result, the  problem has received various high profile institutional and individual attentions including committees, funds as well as parliamentary and Cabinet level attentions. These efforts by various political administrations are  yet to yield the desired results.
Time would, however tell if the latest move, a 20 per cent tax on plastic materials aimed at “protecting the environment” would remedy the country’s plastic waste mess.