To tax chemicals or not to tax chemicals

Instead, they point to high initial social costs and that the administrative burden on companies as a result of the tax has been burdensome, time-consuming and costly. It also emerges that the tax is not cost-effective as it should tax the chemical substances and not the weight of the product, as is currently the case. It has also been difficult to assess the steering effect of the tax on the presence of hazardous chemical substances in electronics, as in some cases there are restriction rules at EU level together with other instruments that have an impact, such as rules for public procurement, ecolabelling and companies' own efforts to create more sustainable and environmentally friendly products.

Since its introduction, the chemical tax has been rightly criticized because it cannot be considered to be appropriately designed. It does not encourage companies to use less hazardous flame retardants in any practical sense, but can instead lead to false substitution. It creates an incentive for the producer to prioritize maximum tax reduction over safer chemicals. IT&Telecom companies have been clear about this in the work on the evaluation.

The authorities are now continuing their work to review whether there is a need for changes in the legislation. IT&Telecom will continue to monitor and actively participate in this work.

Frida Faxborn

Industrial policy expert

To the report on skatteverket.se

In English:

On October 1st, the Swedish Chemicals Agency and the Swedish Tax Agency presented their evaluation of the chemical tax for certain electronics (for example mobile phones and computers) and the result is clear - so far it has had a limited effect. The tax was introduced on July 1, 2017 and the authorities have not been able to establish that chlorine, bromine and phosphorus in flame retardants have decreased in our homes as a result of the tax.

Instead, they point to high initial social costs and that the companies' administrative burden as a result of the tax has been burdensome, time-consuming and costly. It also appears that the tax is not cost-effective, because the chemical substances contained should be taxed and not the weight of the product, which is happening today. It has also been difficult to assess the tax's controlling effect on the presence of hazardous chemical substances in electronics, as in some cases there are restrictions at EU level together with other policy instruments, e.g. rules for public procurement, eco-labeling and companies' own work to create more sustainable and environmentally friendly products.

Since its introduction, the chemicals tax has endured justified criticism because it cannot be considered to be appropriately designed. It does not encourage companies to use less dangerous flame retardants in any practical sense, but can instead lead to false substitution. This creates an incentive for the producer to prioritize maximum tax reduction instead of safer chemicals. The IT & Telecom companies have been clear about this in the work with the evaluation.

The authorities' work is now continuing to review whether there is a need for changes in the legislation. A work the IT & Telecom companies continue to monitor and actively participate in.

Frida Faxborn

Business Policy Expert