The ineffective, confiscatory chemical tax
If you reflexively dismiss industry criticism of new taxation, please stop reading here. If you think that environmental taxation should have positive effects on the environment and believe that IT and white goods suppliers have an important role in promoting a sustainable society, read on and try to stay calm.
"Teacherless lessons" was a concept that in the 1980s came to symbolize how a stab at an investigation suddenly takes on a life of its own and is almost decided. The equivalent in "modern times", i.e. now in 2016, risks becoming "Tax on certain chemicals in consumer goods". A well-intentioned idea to phase out hazardous substances in white goods and electronic products has ended up in a proposal that is at best ineffective from an environmental point of view, while telephones, computers, refrigerators and other electronic and white goods will be up to SEK 400 more expensive for the consumer. And - as if that were not enough - it will bring with it a massive and growth-inhibiting bureaucracy for authorities such as the Swedish Tax Agency and the Swedish Customs.
The proposal, which now risks slipping through the current budget process unless someone in the government comes to their senses, proposes a general tax on flame retardants. This, in the form of an excise tax on electronics and white goods delivered in Sweden, is expected to bring in SEK 2.4 billion to the treasury.
First of all, let's consider the fact that electronics and white goods suppliers are obliged to use flame retardants in their products to comply with current electrical and fire safety requirements. Some of these flame retardants are de facto harmful to health and the environment, while others are significantly better. In this respect, Swedish companies have already achieved a great deal by working very purposefully for years to switch to increasingly less environmentally harmful substances, for example by moving away from brominated flame retardants to more gentle phosphorus-based ones. The IT industry has long been greening its products far beyond current legislation, and there are also a number of start-up companies whose business idea is to develop more climate-friendly and less harmful alternatives.
A first and quite fundamental flaw in the present tax proposal is that it takes no account at all of the differences in environmental impact between different types of flame retardants - that is to say, the degree to which they are actually harmful to the environment or to health. Instead, it has been decided to provide partial deductions based on the method by which the flame retardant is added to the products, which is completely irrelevant from an environmental point of view.
Mistake number two is that only products delivered in Sweden should be taxed. Yes, you read that right. So if you buy your phone from a foreign supplier online, you won't be taxed. The argument is that online trade is "insignificant", which doesn't sit well with the fact that e-commerce in electronics and white goods accounts for about 25% of total consumption today. Promoting international e-commerce is not wrong in itself, but giving it unfair advantages over Swedish companies in the form of reverse customs duties that affect growth and employment here at home is just that: wrong.
And so it goes, with error after error right through the proposal. If you want to familiarize yourself with the details properly, I recommend you to read the letter, including attachments, that we at IT&Telecom companies in collaboration with a number of industry organizations and individual suppliers sent to Nina Cromnier, DG at the Swedish Chemicals Agency yesterday, with a request to the Chemicals Agency to contribute to the Ministry of Finance to refer the tax proposal on chemicals in certain consumer goods.
You may also want to read this contribution to the debate: The proposed chemicals tax misses the target completely, by Hans Wendschlag, European Head of Sustainability at HP and member of the IT&Telecom Sustainability Council.
Together, we have tried for several years to inject some sense into the investigation, but have received almost no response. What we can now hope for is that a broader public understands that the government is about to commit a climate policy blunder in the billions.
If you want to know more about how the chemical tax affects you as a consumer, and how you can help stop it, visit Kemikalieskatten.se!