11. Policy recommendations

Considering the Andalusian context (main economic sectors, current environmental taxes, and current waste sectors) and a stocktake assessment of economic instruments used to incentivise circular economy (at EU, national and regional level), this chapter identified two environmental taxes with the potential to incentivise circularity in Andalusia while raising revenue: 1) an increase in the tax rates for two subcategories of the national waste disposal tax and 2) an aggregates extraction tax. These taxes would address the circularity of different economic sectors while increasing waste prevention and improving waste source separation and recycling rates. In addition, such taxes would help to operationalise the Polluter Pays Principle in the region.

The recently published Spanish Law 7/2022 on Waste and Contaminated Soils for a Circular Economy has reconfirmed the interest of these two proposals. Firstly, the regional increase of the national tax rate on hazardous waste would be necessary in the region to prevent an increase of hazardous waste disposal, as the amount of hazardous waste treated and/or disposed of by Andalusia is already around two and a half times the hazardous waste than generated in the region. Additionally, the regional increase of the national tax rate on CDW disposal, together with an aggregates extraction tax, could increase the circularity and prevention in the construction sector, which is one of the sectors contributing the most to global warming.

Looking at economic implications of each instrument, the highest revenue would be obtained with the aggregates extraction tax whose revenue could range from 20 to 57 million EUR. The tax rate increase on CDW disposal is estimated to generate a potential revenue of 6 million EUR. Finally, the instrument with the lowest potential revenue would be the regional increase of the national tax rate on hazardous waste disposal. In addition to the environmental advantages and revenues derived from the two regional taxes proposed, there might also be a strategic argument as occupying these tax bases on the level of the AC may make the Junta eligible for compensation by the national government if national taxes were to be introduced for these tax bases.

While different economic sectors would be affected by these instruments – namely, the building sector, the industry generating hazardous waste and households generating general waste –, consumers are expected to bear most of the tax costs in the three instruments.

This chapter has estimated the implications of each of the instruments using a ceteris paribus approach, thus results should be taken as approximations. More detailed studies would be needed to get more accurate results. A more detailed study could also consider alternative tax designs, such as a progressive tax that would ease the administrative and/or financial burden on small and medium enterprises. Nevertheless, the adoption of the suggested instruments in the proposed form or slightly modified would certainly provide a better incentive structure for moving towards more resource efficiency and material circularity.

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