Amendments to the chemicals tax welcomed - unless the law is withdrawn
The purpose of the introduction of the Swedish chemicals tax on electrical and electronic products was to reduce hazardous chemical substances in people's home environment and to stimulate producers to use more environmentally friendly alternative chemicals in their products. In 2020, the Swedish Chemicals Agency (KEMI) and the Swedish Tax Agency concluded that the Swedish chemicals tax has largely not changed the use of flame retardants in electronics, that it is not cost-effective, that it has increased prices for consumers and that it is administratively burdensome for companies.
On May 17, KEMI and the Swedish Tax Agency presented in their final report to the Government proposals on how the chemicals tax should be changed to ensure that it better fulfills its purpose. The authorities suggest, among other things, that it should be clarified that the tax should only cover flame retardants, that the level of taxation should be based on the inherent hazardous properties of the substances and that the maximum possible tax reduction should be increased. This is welcomed by IT&Telecom companies and pinfa, a sectoral group within Cefic.
But unfortunately, there is no zero tax option for products containing only the very best flame retardants or none at all. Control of substances is also possible because there are no test methods to distinguish between additive and reactive flame retardants, nor are there standardized analytical methods for all flame retardants. The proposed taxation principle is also very complex and difficult to understand. Furthermore, no changes are proposed to support a circular economy as the second-hand trade of used electrical equipment is not exempt from taxation.
In addition, KEMI and the Swedish Tax Agency propose that the tax should be extended to cover more products, e.g. printers. Such an extension would affect a further large number of companies whose products are mainly sold business to business and do not fall within the scope of the tax, i.e. use in the home environment. Such an extension is premature to implement given the authorities' previous conclusions.
We would rather see the Swedish chemicals tax withdrawn completely in favour of voluntary or other legislative initiatives to promote substitution of chemicals of concern, e.g. within the framework of the European Chemicals Strategy. The Swedish chemicals tax is a national tax on products that are mostly developed and designed for a global market, which is an inefficient way to drive development in a global industry.
If the Swedish tax is to be retained after all, IT&Telekomföretagen and pinfa are willing to continue our support to ensure that proposed changes are realized so that the law taxes the right substance characteristics, minimizes the administrative burden and rewards those companies that have invested in proactive substitution programs.
Frida Faxborn, Industry Policy Expert IT&Telecom