If you’ve seen the recent Progressive Conservative attack ads against Dalton McGuinty and the Ontario Liberals, then you’ve probably heard “sneaky eco tax” numerous times. Well, a few things need to be clarified about the “eco tax” that was introduced last year. First, it was never an actual tax. Second, the money collected through eco fees is retained by the retailers (the stores like Canadian Tire) – none of the proceeds go to the government. It was not a “sneaky tax grab” as the Tories are framing it, and there is much more to the issue. Below is a blog post I wrote during my internship at the Canadian Institute for Environmental Law and Policy last fall. Hopefully this will clear up any misunderstandings and help you understand that many important policy tools are framed as “sneaky tax grabs” just to make a certain party (or politician) look bad. I will admit the Liberals should have played a larger role in the plan with Stewardship Ontario, and much better promotion and information should have been provided for the public. However, we’ve been paying such “extra fees” on many products before 2010, including tires and electronics such as computers (where the fees went to finance Ontario’s Waste Electrical & Electronic Equipment recycling program).
You don’t have to read through the whole boring post below (although I recommend reading the last paragraph lol), the main point I want to get across is that you shouldn’t believe everything in political attack ads, especially those from Tim Hudak’s campaign. Issues should not be framed so black and white, it should not just be framed as “I’ll lower your taxes and the other guy will raise them.” I’m a New Democrat, but I don’t totally dislike Dalton McGuinty. He’s not the evil “Tax Man” and the sneaky “eco fees” are not profiting him, they go to the retailers. Do your own research, ask questions, and vote for who you feel will be the best premier for you and other Ontarians.
The Truth Behind "Sneaky Eco Fees"
Most hazardous household wastes are thrown out with regular garbage and end up in a landfill or incinerator, where chemicals in the waste can contaminate Ontario’s environment. To avoid such hazardous waste problems the Waste Diversion Act was created on June 27th, 2002. As well, several municipalities have set up their own household hazardous waste collection programs paid for entirely by municipal taxpayers. Both promote the reduction, reuse and recycling of waste and are a means to provide for the development, implementation and operation of waste diversion programs.
Under the Waste Diversion Act (WDA) a non-crown arm’s length agency called Waste Diversion Ontario (WDO) was created. Under the WDA the WDO is required to work co-operatively with an Industry Funding Organization (IFO) to develop a waste diversion plan for designated waste. Therefore, Stewardship Ontario was created as the IFO and in February 2008 the Minister of the Environment (MOE) approved Ontario’s Municipal Hazardous or Special Waste Program Plan (MHSW Plan). The Plan was developed by Stewardship Ontario in cooperation with WDO as a way of managing hazardous household waste materials such as paint, antifreeze and fertilizers.
Stewardship Ontario is responsible for managing and safely disposing of the hazardous waste. Its job is to work with retailers in Ontario to set up waste drop-off locations and take back products for recycling. For example, Orange Drop is run through Stewardship Ontario to help encourage the recycling of municipal household hazardous and special waste materials that require extra care when they’ve reached the end of their useful lives. Even more, under the plan thousands of products that fall into the nine hazardous material categories will have extra fees attached that stewards (the manufacturers) must pay to Stewardship Ontario.
As well, it is important to remember that Stewardship Ontario is an independent, industry based organization that develops and operates the MHSW program on behalf of the stewards (the manufacturers of the products) which provide the funding. However, the stewards are the manufacturers and it is unlikely they will pay for this out of their own pockets. So where does the funding come from and who should pay?
Previously, the public paid for the costs of managing the MHSW in Ontario through municipal property taxes. But under the stewardship model adopted in the MHSW program, the full cost of managing hazardous wastes are shifted from the taxpayer to the manufacturer of the product similar to the polluter pays principle. In theory this is a good idea, but problems arise when implementing such plans. A business’ main goal is profit-making, so of course they do not want to have to pay extra fees even though they are creating pollution and waste.
A fee is charged to stewards (the manufacturers and producers), not to consumers or retailers (this is also important to remember). The Environment Commissioner’s Report states that under the MHSW program, Stewardship Ontario charges the stewards a fee by unit for products introduced into the Ontario marketplace that require the management of hazardous or special waste when discarded. Making stewards pay for the recycling and safe disposal of wastes created by their products helps transfer the costs of managing these wastes from the taxpayer to the steward.
However, this is where the controversy started. Many manufacturers passed on the extra fees to retailers as a way of making back what they owed to Stewardship Ontario. Since the retailers were paying more for products, they marked-up the prices which meant passing the fees on to consumers. In addition, retailers such as Canadian Tire called the extra costs “eco fees,” and much of the eco fees were mismanaged.
We must note that the term “eco fee” was created by retailers and it is not a component of the MHSW Plan. The MHSW Plan gives the stewards the option to either absorb the stewardship fees charged by
Stewardship Ontario as a cost of doing business, or to “pass the fee along” by increasing the wholesale price of the products it sells to retailers. In addition, some retailers may choose to absorb the increase in wholesale prices where as others may add some or the entire price increase to the price tags of the actual products. This in turn internalizes an externality, which seems pragmatic but has its faults. A main issue was that when the program was implemented on July 1st 2010, some retailers chose to create a separate “eco fee” line on their cash register receipts, presumably to make a price increase visible to consumers.
Of course the “eco fee” led to confusion and negative media attention, and many consumers viewed it as a “recycling tax.” We all saw the public outcry over the idea of a green tax during the 2008 election, so this reaction was no surprise. Consumers saw this new eco fee as a tax grab by the government, unaware the revenue did not even go to the government but rather to Stewardship Ontario (which as stated before is a non-governmental, industry run organization).
It is evident that retailers should not be allowed to call it an “eco fee,” as this was never mandatory. Unless the program charged the fees at the point-of-sale, this term is misleading and allows the retailers too much flexibility in what they can charge consumers. Still, visible fees (such as the extra cost being included on receipts) could be a great public education tool to inform people that there is a program for how to safely manage and recycle the wastes.
It is obvious that the Ontario government failed to provide adequate leadership and guidance to Stewardship Ontario to ensure they communicated the plan properly with Ontarians. But this is just one of the problems with the plan.
Additionally, Stewardship Ontario is an industry based arm’s length agency which means it is regulated by government but controlled by industry. Therefore they did not create a steward fee where manufacturers with the least toxic products would pay less than their competitors, since their main concern is taking care of the industry. However, that type of competition would entice manufacturers to develop greener products in order to reduce their fees, which would be better for the environment and consumers. For example a company with a less toxic paint should pay lower fees than its competitor with a paint that is more toxic. A solution would be to bring in “differential fees” which would reward greener products with lower fees.
Furthermore, another concern was over which products were included. Issues regarding the inclusion of compost were made clear through public comments on the Environmental registry website. Many do not consider compost as hazardous and do not see the reasoning behind it being included with items such as pesticides and batteries. But there will always be complaints and grievances with any extra costs on such well-used products.
However, the cost is essentially unavoidable. We can pay for the cost of this disposal through a taxpayer-funded municipal recycling program, through the mark-up of product prices to fund a steward-managed program, or through reduced landfill space and a degraded environment caused by unsafe disposal. Another option brought up by the Ontario New Democratic Party was that the plan should be directly administered by the Ministry of the Environment, not the industry-run, arm's-length agency Stewardship Ontario. This would provide more government accountability and control, as well as real environmental support rather than just an industry run program.
Regardless, we should think of the eco fee as a way of taking responsibility for ensuring hazardous waste products are managed and disposed of safely. As well, it means less waste in landfills, less damage to our environment, and ensuring a cleaner and better future where we take responsibility whether as a consumer or producer.
Below are some great reviews by our Environment Commissioner, Gord Miller:
http://www.eco.on.ca/blog/2010/07/27/clearing-up-the-confusion-around-eco-fees/
http://www.eco.on.ca/blog/2010/07/27/%E2%80%9Ceco-fee%E2%80%9D-controversy-must-not-jeopardize-hazardous-waste-program/
Here's Stewardship Ontario's website which explains everything:
http://www.stewardshipontario.ca/consumers/what-we-do/mhswenvironmental-fees
Thanks for reading!
+ Lorelie
Holy gurrrrrl you're all up in the eco fees! Very informative. thanks :)
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