Letter to DG Chemicals Inspectorate regarding the tax proposal on chemicals in certain consumer goods

First, thank you very much for participating in our roundtable discussion in Almedalen.

As stated during the meeting, we are deeply concerned about the current proposal, which will completely defeat its stated purpose of incentivizing manufacturers to switch to safer chemical alternatives.

Unfortunately, the tax will also fail to generate the assumed 2.1 billion/year for the Treasury. It does not take into account the significant increase in public sector costs for purchasing white goods and IT equipment for schools and hospitals, among others. In addition, it has underestimated how much trade will move online. And purchases from abroad by private individuals will increase (which are excluded from the tax proposal and thus generate no tax revenue).

The major shortcomings of the tax proposal are set out in Annex 1.

For the following reasons, the tax will not have the intended environmental effect:

1. the tax is incorrectly based on the technical properties of the respective flame retardant, i.e. additive or reactive added flame retardant. This is not relevant from an environmental and health perspective. In chemical legislation, ecolabeling and public procurement, substances are regulated based on the inherent health and environmental properties of each substance, not how the substances are added to the product. The proposal may lead to so-called false substitution, i.e. substances with documented carcinogenic and/or endocrine disrupting properties receive the maximum tax rebate. For examples, see Annex 2. We have also identified a number of substances with documented good properties that are subject to 100% tax, see Appendix 2 for examples.

2. electrical and electronic products are currently manufactured for a global market. It is highly unlikely that companies will change their production because of this tax in Sweden, especially as it is not specified which properties a substance must have in order not to be taxed. This means that consumers and the public sector in Sweden will incur an additional cost, and the products will continue to have the same chemical content as the products manufactured for the EU market.

3. Annex 2 lists a number of phosphorus-based flame retardants that are proven alternatives to bromine- and chlorine-based flame retardants. Unfortunately, phosphorus-based flame retardants are also taxed.

4. Products ordered by consumers from other countries are exempt from the tax. Already today, internet sales account for about 25% of these products and this is increasing every year. This tax will make it even more advantageous to order products online from abroad. These products will not be taxed and they will contain all flame retardants allowed in the EU internal market.

We therefore appeal to you to react against the proposal, if possible stop it, then invite industry representatives to a dialogue where we are ready to constructively contribute to a tax proposal that rewards proactive companies and taxes products containing documented unsuitable substances, and does not introduce incentives to circumvent the tax by sourcing products from abroad. We are also ready to work together to ban chemicals of concern at EU level.

A constructive proposal for changes to the tax (annex) has been delivered to the policy experts at the Ministry of Finance, but unfortunately it has not led to any dialogue.

We consider it problematic that the investigator did not follow the government's directive for the investigation on several points but chose to make the proposal more extensive.

In the more than 3 years that the investigator has been working on the proposal, industry and affected companies have met the investigator on a single occasion. Repeated requests have been consistently rejected. The lack of consultation with experts and affected companies may partly explain why several serious problems remain.

Stockholm 2016-08-25

Klas Elm, CEO Electronics Industry
Matts Spångberg, CEO EHL
Karin Johansson, CEO Swedish Trade Federation, Stockholm
Anne-Marie Fransson, Director of the Swedish IT & Telecommunications Association
Klas Wåhlberg, CEO of Teknikföretagen