The German government is postponing the implementation of its plastics tax by one year to Jan. 1, 2025, according to a Jan. 4 announcement. The move was described as "necessary in order to gain more time to develop an efficient solution with as little bureaucracy as possible."
The announcement was made as part of an array of changes to the federal government 2024 budget, which has a huge fiscal hole after the German constitutional court ruled the government’s plans to repurpose €60 billion ($66.5 billion) in “emergency” COVID-19 credit lines towards infrastructure and the energy transition illegal.
The European Union requires member states to pay a plastics levy, the costs of which have so far been borne by taxpayers through the federal budget. On Dec. 13, 2023, the German "traffic-light" coalition government announced it would pass that cost onto manufacturers of specified single-use plastic products, referred to as "polluters," in order to contribute €1.4 billion to ($1.5 billion) its budget deficit.
The introduction of the plastic tax has been heavily criticized by the plastic industry. Five associations of the plastic packaging value chain members called on the German federal government to withdraw the announced levy "in order to avoid further damage to the circular economy and climate protection and to avoid loss of industrial jobs."
Plastics Europe, VDMA, the Federal Association of the German Food Industry, the General Association of the Plastics Processing Industry, and the Industrial Association for Plastic Packaging (IK) argued that the plastic tax increases the likelihood of ‘ecological misdirection’. They referred to a research study by the Federal Environmental Agency (UBA) that concluded that a levy aimed solely at single-use plastics could “trigger significant misdirection effects in favor of other materials which, when viewed from an ecological balance point, are no better [than single-use plastics], and, depending on the specific area of application, are sometimes even worse.”
The association called instead for stronger financial incentives for highly recyclable packaging, calling the proposal of the plastic tax ‘populist’. They emphasized that companies in the German plastic packaging value chain "have heard the wake-up call" to focus on products’ end of life, which they argue has resulted in the recycling rate of plastic packaging increasing from 42 percent in 2018 to 67 percent in 2022. It is however also important to note that this success was spearheaded by government policy, with the German Packaging Act 2019 (VerpackG) obliging traders to participate in the recycling of their products’ packaging.
“Even three weeks after the announcement, it is still completely unclear who should pay for what and how much,” said Martin Engelmann, general manager of IK. “The federal government should realize that, given the dense regulatory network for packaging in Germany, there is no room for a populist plastic tax. The announcement has already caused considerable uncertainty amongst companies across the entire value chain. Investment decisions were stopped and instead plans for relocating production abroad were accelerated,” he explained.
Although a lot of details are still missing, the following is known about the plastic tax.
The German Single-Use Plastics Fund Act, which was passed in May 2023 and implements Article 8, 1-7 of the Single-use Plastics Directive into German law, created the legal basis for the implementation of the single-use plastic fund by the UBA.
The regulation determines the levy rates and the payment system for the single-use plastic fund. Manufacturers of specified single-use plastic products will pay a levy into the fund to support the public sector in combating environmental waste. The UBA will administrate the fund and allocate the money to the municipalities. This will require developing databases and payment processing processes, which the German government admitted needing more time to develop "with as little bureaucracy as possible," a feat it is not well-known for.
Registration of manufacturers and beneficiaries was scheduled to start on Jan. 1, 2024, but that deadline must now be postponed too. Companies must report the extent to which they are liable to payment of the levy, through submission of a declaration stating the single-use plastic products made available or sold on the market in the previous year, broken down by type and mass, in kilograms. An exception applies to manufacturers who distributed less than 100 kilograms of the products in question, or only deposit bottles for the first time in the previous year. Deliberate or negligent violations of registration or reporting obligations, whether deliberate or due to negligence are administrative offenses punishable by a fine up to €100,000.
The following taxes, based on calculations of the actual costs of clean-up, are due for each kilogram of products placed on the market:
- Tobacco filter: 8.972 euros per kilogram
- To-go beverage cups: 1.236 euros per kilogram
- To-go food containers: 0.177 euros per kilogram
- Bags and foil packaging: 0.876 euros per kilogram
- Beverage containers without a deposit: 0.181 euros per kilogram
- Beverage containers with a deposit: 0.001 euros per kilogram
- Light plastic bags: 3.801 euros per kilogram
- Wet wipes: 0.061 euros per kilogram and
- Balloons: 4.340 euros per kilogram.
The municipalities will receive payments from the fund in proportion to what they are entitled to under a carefully established and administrated points system. Both the tax rates and points system will be reviewed by the federal government every three years in accordance with legal requirements.