EuRIC supports a Czech proposal to reduce VAT on goods containing recycled materials
One of the long-standing arguments that recyclers have discussed is the question about how governments could help with recycling. Tyre and Rubber Recycling has often questioned the lack of a “Greenhouse Environment” for recycled goods.
As we know, whilst recycling materials is good for the environment, it does not always equate to recycled goods being cheaper. The consumer being what he/she is, if faced with buying new from virgin materials, or new from recycled materials where the goods with recycled content are more expensive, the consumer will normally buy cheaper new from virgin materials.
Governments could assist here by reducing the VAT level on goods with a recycled content – though the recylate inclusion would have to be at a specified level before a VAT reduction were awarded.
The UK, could have given its recycling sector a boost when it left the EU by unilaterally adjusting VAT on goods with a high recycled content but so far, it has done nothing to encourage the domestic recycling sector.
However, the Czech government has put a proposal to the European Union that there should be a reduction in VAT on goods with a recycled content.
EuRIC reiterated its strong support for economic incentives as a powerful tool for the transition to a circular and climate-neutral economy. Fiscal instruments are no exception. Accordingly, EuRIC warmly welcomes the proposal made by the Czech Republic to the Council to explore lower VAT rates for products made of recycled materials and recyclates.
Replacing extracted raw materials with recycled materials brings significant and well-documented environmental benefits, both in terms of resource efficiency and climate and energy savings. These environmental benefits are not internalised in prices, although they are often the most important factor in consumers’ choices and public procurement. Therefore, fiscal incentives in the form of lower VAT rates have a major role to play in better rewarding environmental benefits and in stimulating sustainable consumers’ choices by increasing the price competitiveness of sustainable products.
“It is fundamental to consider fiscal incentives as key enablers for the transition to a more circular and climate-neutral economy,” said Emmanuel Katrakis, Secretary General of EuRIC. “The Czech Republic’s formal request to the Council to examine the possibility of reducing the VAT rate on products using recycled materials is a first very positive step. Indeed, it is necessary to ensure that tax rules at EU and national level are in line with the objectives of the Green Deal, which is often not the case”.
EuRIC looks forward to working with the Spanish Presidency of the Council, Member States, and EU institutions to introduce reduced VAT rates for products with recycled content, which will undoubtedly stimulate recycling and complement the regulatory measures introduced for different waste streams.