Is a fee still a tax? And do they work for effective disposal of hazardous waste? Consumers in the province of Ontario, Canada, are asking themselves now as they check out of their local supermarket. Starting July 1, many products from fluorescent light bulbs to tires will generate an additional fee that is tallied at the bottom of receipts.
These “eco fees” cover the costs of recycling and disposing municipal hazardous waste. Stewardship Ontario, the agency that collects the fees from retailers, uses the money for what it has named the Orange Drop program.
The fees coincide with Ontario’s new harmonized sales tax (HST), a new value added tax (VAT) system that replaced the province’s previous goods and services tax (GST), or actually, provincial sales tax. Critics of the old GST system complained about the embedded and hidden taxes that burdened both consumers and businesses, as that tax had been imposed every step of production. The new taxation scheme was introduced to reduce this inefficiency.
But expectedly, the taxes’ introduction has caused some confusion, angst, and anger among consumers. Some consumers have complained that the same product incur varied eco-fees from different retailers. Others are upset that the HST—which in Ontario is 13%–is applied to on top of the eco-fees. Some Ontario residents pointed out that even if the charge amounts to a few pennies, the aggregate total in a province home to 12 million people would surely add up.
And to muddy the waters even further, Stewardship Ontario has given retailers the option to either roll the eco-fees into the cost of the products, or simply itemize them on the receipt. And items that are deemed “eco-friendly” may—or may not—incur these fees.
The appearance of any lack of consistency or transparency is upsetting consumers, and now politicians are joining the fray. One complaint is that the consumer is taxed, and not the producer, so manufacturers have no incentive to address the toxicity and carbon footprint of their products.
Stewardship Ontario has its tail between its legs, and has responded with a list of FAQs and myths that have been perpetrated by the media and consumers. Some of the explanations are logical, and I personally would feel for any of its employees who have had to answer the phones and hear out fuming residents. But the page’s tone have a “you should’ve known better” sheen on it, which will not help the agency’s cause on the public relations front.
So what are the lessons here?
Change will always cause belly-aching and hype that the government is piling on more oppressive taxes. But transparency is also the key. I remember when fees on plastic bottles increased, which caused some grumbling in the beginning, but in the long run have not seemed to curb bottled water consumption in California. And so we just pay them. It’s easy to see that tire disposal fee when you have your car serviced, and wonder if that charge is really accomplishing a safe disposal or reuse for those old items. To that end, consistency is also important—why would retailers allowed to charge what they want and disclose the fees however they choose?
A larger question is whether adding fees really will dissuade consumers from curtailing their use certain products. Is it possible that other methods beyond imposing fees would work? Ontario’s experience is only giving us a case study of not what or how to do. We need examples of what works and is effective.