Adopt­ing plas­tic tax the way to go

Lesotho Times - - Opinion & Analysis - Khotso Mosola

IN 2003, the South African govern­ment in­tro­duced a levy or a tax on plas­tic bags and Botswana fol­lowed suit with a sim­i­lar mea­sure in 2007, thus join­ing a hand­ful of coun­tries in Africa and across the world which have adopted a com­bi­na­tion of mea­sures to curb high rates of plas­tic lit­ter.

The main pur­pose of this kind of in­ter­ven­tion might be ob­vi­ous; that of re­duc­ing plas­tic lit­ter and thereby de­creas­ing pol­lu­tion, but there is ar­guably also an eco­nomic ben­e­fit that can ac­crue from such a pol­icy in­ter­ven­tion. There­fore my ar­gu­ment in this ar­ti­cle is sim­ple; Le­sotho should con­sider adopt­ing plas­tic tax, first, as a mea­sure to bol­ster tax rev­enue col­lec­tion in the face of pro­jected dwin­dling South­ern African Cus­toms Union (SACU) rev­enue, sec­ond, as a mech­a­nism for proper waste man­age­ment.

At the mo­ment, it might seem naïve to sug­gest this kind of a pol­icy in­ter­ven­tion given the small size of Le­sotho’s econ­omy but ob­vi­ously this is not an un­fea­si­ble a pol­icy idea that can be ig­nored in the cur­rent en­vi­ron­men­tal and eco­nomic sit­u­a­tion that Le­sotho is in.

As will be ob­served, the ben­e­fits of plas­tic tax can be ob­served in the long run par­tic­u­larly when im­ple­mented in con­junc­tion with other mech­a­nisms such as those pro­posed in the bud­get speech of 2016/17 by Fi­nance Min­is­ter ‘Mam­phono Khaketla es­pe­cially when the ob­jec­tive is to bol­ster tax rev­enue.

Le­sotho’s econ­omy has seen mod­est growth rates in the last decade and so has the pur­chas­ing power of its con­sumers par­tic­u­larly the work­ing class. This can ca­su­ally be ob­served by tak­ing into ac­count the fol­low­ing fac­tors; an ex­pected con­sumerism that has so de­fined the town folks in Le­sotho and the open­ing of the two big­gest shop­ping malls in Maseru aug­mented by South African re­tail stores and eater­ies which pre­sum­ably have in­creased de­mand for consumer goods and in turn de­mand for plas­tic shop­ping bags.

This as­ser­tion, how­ever, is not backed by any re­search. There­fore, the re­sul­tant ef­fect of this de­mand in plas­tic bags, I would ar­gue, has been the high vol­ume of plas­tic bag garbage that’s so eas­ily get blown by wind only to hang on fences and trees which nor­mally get washed away dur­ing heavy rains, which ends up block­ing drainage pipes and cul­verts.

Un­doubt­edly, the fore­go­ing is a sce­nario that needs the se­ri­ous at­ten­tion of pol­i­cy­mak­ers mainly be­cause of the ben­e­fits that this kind of pol­icy can have on the en­vi­ron­ment and con­comi­tantly as a mea­sure to en­hance tax rev­enue.

In­ter­est­ingly, stud­ies have been car­ried out in the SADC re­gion to as­sess the im­pact of the im­ple­men­ta­tion of plas­tic levy or tax (Dik­gang, Wiser 2010, 2012). The find­ings of th­ese stud­ies are ac­tu­ally fas­ci­nat­ing for pol­icy mak­ers to de­lib­er­ate on so as to make a de­ci­sion as to which ap­pro­pri­ate model and reg­u­la­tory frame­work to adopt that best suit the case of Le­sotho.

Plas­tic bag tax in Botswana and SA If one looks at the lit­er­a­ture on poli­cies that were adopted by South Africa and Botswana in try­ing to curb the de­mand for plas­tic bags, it be­comes ap­par­ent that the tar­get of those coun­tries poli­cies has largely fo­cused on food and re­tail stores or su­per­mar­kets. This in­ter­ven­tion has, by de­sign, ex­cluded other sec­tors such as the cloth­ing sec­tor.

It might be un­der­stand­able to tar­get sec­tors such as food and re­tail stores given their pre­sum­ably high num­ber of plas­tic bag us­age per cus­tomer and the propen­sity for cus­tomers to re­quest for more plas­tic bags.

In or­der for a pol­icy on plas­tic tax to be deemed ef­fec­tive, it must be able to meet the re­quired ob­jec­tives oth­er­wise it might be a fruit­less ex­er­cise. If the pur­pose of plas­tic tax leg­is­la­tion is to re­duce lit­ter and af­ter its in­tro­duc­tion the eval­u­a­tion shows that lit­ter is sig­nif­i­cantly re­duced to the set tar­get, then the pol­icy will be deemed to be work­ing.

The afore­men­tioned cases of South Africa and Botswana are very in­struc­tive in this re­gard. For in­stance, in the case of Botswana, ac­cord­ing to Dik­gang and Wiser (2010) the in­tro­duc­tion of plas­tic tax in the econ­omy was meant to curb the de­mand for plas­tic bags in or­der to re­duce its neg­a­tive im­pact on the en­vi­ron­ment.

The ob­jec­tive was not to en­tirely wipe out the ex­is­tence of plas­tic bags but the govern­ment also wanted to en­cour­age re­cy­cling of plas­tic refuse.

The Botswana leg­isla­tive frame­work en­tailed the fol­low­ing el­e­ments:


reg­u­lated the thick­ness of plas­tic bags; lit pro­hib­ited the man­u­fac­ture and im­port of plas­tic bags thin­ner than 24 mi­crons;

lany vi­o­la­tion of the Stan­dard Act by any firm or in­di­vid­ual was pun­ish­able by a prison sen­tence or a fine;

lthe cost of plas­tic shop­ping bags had to be trans­par­ent and dis­closed pub­licly;

lit im­posed sup­port for en­vi­ron­men­tal ini­tia­tives

lin­di­vid­ual bags or con­sign­ment slips had to in­di­cate clearly in English and/or Setswana the name and country of ori­gin of the im­porter, pro­ducer or dis­trib­u­tor.(dik­gang, Wiser 2010)

The im­pact anal­y­sis of this pol­icy in­ter­ven­tion in Botswana shows that it be­came ef­fec­tive mainly be­cause the levy has been con­sis­tently high from the on­set.this anal­y­sis is very fas­ci­nat­ing be­cause it made a com­par­a­tive anal­y­sis of this pol­icy in­ter­ven­tion by look­ing at dif­fer­ent in­come groups, namely high in­come earn­ers to low in­come earn­ers.

This was achieved by tar­get­ing spe­cific re­tail­ers which caters for th­ese in­come groups. The South African case in this re­gard is also in­struc­tive; the pol­icy in­ter­ven­tion was more or less the same.

The ma­jor dif­fer­ence of this in­ter­ven­tion from that one of Botswana is that the levy was not too high as it was a mod­est 3 cent per bag when it was in­tro­duced.

In 2015, the then Min­is­ter of Fi­nance in South Africa Nh­lanhla Nene re­ported a stag­ger­ing R1.1 bil­lion tax col­lec­tion from 2003 up to 2015, with R41 mil­lion col­lected from the 2004/05 when the tax was in­tro­duced, while in the fis­cal year 2009/10 this rose to R110 mil­lion and R169 mil­lion in 2013/14.

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