9. Assessment: Circular Economy and Waste Management

A strategic environmental reform of tax instruments in Andalusia should be able to address circularity and to apply the polluter pays principle (PPP) to its main economic sectors, i.e., the service industry (including tourism), building industry, agriculture, and mining. In fact, the PPP is one of the governing principles of the draft bill of the Andalusian Law on Circular Economy (article 4d).

In addition, Andalusia could use such a tax reform to improve its source separation and recycling rate and meet the EU targets (Table 7.A.1).

Moreover, the Spanish Waste Law 7/2022 includes a national waste disposal tax, which will need to take into consideration the pre-existing regional taxes, as discussed later. In addition, the same Law requires local authorities to implement waste charges that cover collection and treatment costs and allows for the possibility of implementing pay-as-you-throw schemes.

Looking at the main economic sectors and the main waste management challenges of the region, existing environmental regional taxes will have to be modified (section 4.1) and some new instruments could be considered (section 4.2). Section 4.3 describes the selection of environmental taxes to be assessed in section 5. In addition to adjusting tax rates to higher polluting levels, one could also consider tax rebates and reimbursement measures for lower polluting activities, to incentivise a shift in the economy. These economic instruments lie however outside of the scope of this study.

As previously described, there are two environmental taxes currently applied in Andalusia related to circular economy and waste management: the single-use plastic bag tax and the landfill tax on hazardous waste. Both are in its current form incompatible or in conflict with existing or forthcoming national regulation.

According to the measures and deadlines established by the Spanish Royal Decree 239/2018, of May 18, on the reduction of the consumption of plastic bags and by which the Registry of Producers was created, which transposes Directive (EU) 2015/720 into the Spanish legal system (see Table 8.7), it is only allowed in Spain to provide: 1) very thin compostable bags (free of charge), 2) thin compostable bags (prior payment), 3) thick reusable bags with more than 50% recycled plastic (prior payment), and 4) thick reusable bags with more than 70% of recycled plastic (for free).

Considering that thick bags are reusable, and that both reusable and compostable bags are exempted from the Andalusian Tax, the Andalusian Single-Use Plastic Bag Tax is incompatible with the Spanish Royal Decree insofar it levies bags that are banned by the Spanish regulation. Thus, it should either be repealed or reformulated to levy also compostable and/or reusable bags. Such reformulation could reduce the consumption of such bags and be compatible with the Spanish Royal Decree.

After the entry into force of the national landfill and incineration tax, it is unclear what will happen to the existing regional taxes on waste disposal. In Andalusia, the existing tax affects the landfilling of hazardous waste. For cases like this, the 21st additional provision of Law 7/2022 states that the regional taxes can be maintained while the necessary agreements are being made between the State and the Autonomous Communities. But the new Spanish disposal tax will affect several other waste types and will levy not only landfill, but also incineration and co-incineration. For all these cases, the national tax will apply directly.

According to the Spanish Waste Law (art. 93.2), the AC will have the capacity to increase the tax rates above the minimum level established at national level. The tax revenue will be assigned to the Autonomous Communities based on the place where the taxable event occurs (article 96).

The current waste disposal rate in Andalusia for hazardous waste is 35€/t for recoverable waste and 15€/t for non-recoverable waste while the rate for waste disposal of hazardous waste in the national law is 8€/t for waste without pre-treatment required and 5€/t for the rest of the waste.

Different products and activities could be levied in Andalusia to avoid or reduce their environmental impacts. Some of the externalities that are not yet part of the scope of national tax laws and where environmental taxes on sub-national level may thus lead to improvements include:

  • A regional tax on aggregates extraction could incentivise reuse and material recovery of construction and demolition waste and could generate revenue to mitigate some of the impacts of these activities in Andalusia. The White Book for Tax Reform suggests the introduction of a tax on the extraction of aggregates (Proposal 14).

  • A regional tax on tourism with differentiated rates depending on the environmental impact associated with different types of tourism could promote a change of preference in terms of tourism activities and/or compensate for the costs associated with tourism. However, as tourism affects different environmental fields (water, energy, mobility, waste, etc), such a tax should not merely focus in promoting circular economy and waste management and may be better suited to address a combination of different externalities, as is done in Part IV.

  • A regional tax on agricultural plastics could be implemented to avoid their use or to reduce mismanagement of EoL agricultural plastic in Andalusia. Spain is the EU Member States with greatest consumption of agricultural plastics and Andalusia is the region with the largest consumption within Spain (Eunomia;, Deloitte; and ENT, 2021[1]). Due to the strong agricultural sector in Andalusia, end-of-life agricultural plastics is a significant waste stream and mismanaged plastics pollute the environment and degrade over time into microplastics. There is a need to address this issue through economic instruments. However, according to some sources,1 there seems to be plans to create a mandatory national EPR scheme for agricultural plastic, which is considered the more cost-effective option as opposed to a tax.

  • A regional tax on textiles could be introduced to disincentivise consumption of fast fashion products while revenues could be used to increase source separation for high quality recycling of end-of-life textiles. However, a national EPR scheme may be better suited to address textiles waste, due to the complexity of the textile value chain and the diversity of products within the sector. The EU textile strategy foresees that the European Commission provides guidance on the implementation of an EPR schemes for textiles.

  • A regional tax on beverage cartons. Beverage cartons are often not part of the scope of a DRS and were initially considered to be excluded from the planned Spanish Beverage Deposit Refund System (Laubinger et al., 2022[2]). In addition, beverage cartons are hardly affected by the special tax on non-reusable packaging or by the target on reusable packaging, both measures that are included in the Spanish Law 7/2022 on Waste and Contaminated Soils for a Circular Economy. EPR fees for DRS are likely to be higher than EPR fees for kerbside collection. As such, there may be a risk of producers shifting from beverage containers that are required to participate in the more costly DRS (e.g. plastic bottles) to beverage cartons if these are excluded. A regional tax on beverage cartons would level the playing field between producer contributions to the DRS for bottles and overall producer fees for beverage cartons, to prevent a possible migration away from bottles. This tax scenario was assessed during the analysis, however, due to new developments in the Spanish DRS law, which eventually lead to the inclusion of beverage cartons in its scope, the analysis was excluded from the final version of this report.

To concretise and delimit the proposed tax reform in Andalusia three of the seven taxes were selected due to its potential to incentivise a more circular economy. Some of the identified areas are in line with the suggestions of the White Book for Tax Reform: intensification and extension of the taxes of the Waste and Contaminated Soil Law and creation of a tax on the extraction of aggregates. Table 9.1 summarises the selection of the environmental taxes that will be assessed in more detail in the following chapter of this project and the associated justification for their selection:


[1] Eunomia;, Deloitte; and ENT (2021), Conventional and Biodegradable Plastics in Agriculture, https://www.eunomia.co.uk/reports-tools/conventional-and-biodegradable-plastics-in-agriculture/ (accessed on 18 January 2023).

[2] Laubinger, F. et al. (2022), “Deposit-refund systems and the interplay with additional mandatory extended producer responsibility policies”, OECD Environment Working Papers, No. 208, OECD Publishing, Paris, https://doi.org/10.1787/a80f4b26-en.


← 1. Personal communication with Junta de Andalucía.

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