2022.04.27

The Chairman has the floor: Playhouse around the electronics tax

Now the playhouse must end! The electronics tax will have been changed a full eight times since its inception in 2017. Changes that will have heavy administrative and costly consequences for affected companies and consumers.

 

Constant changes are also clear signs that something is not working and needs to be corrected. The tax does not deliver on environmental goals. It is administratively burdensome. It increases the cost for consumers. It lacks serious regulatory oversight due to its complexity. It causes competitiveness to be lost. It makes the pressure for improvement within the EU more difficult. It causes jobs to be lost in Sweden. But above all; the electronics tax does not fulfill any function as an environmental tax, which it was intended to do! We have written confirmation of this from both the Swedish Tax Agency and the Chemicals Inspectorate.

Massive criticism in all consultation responses

APPLiA has now submitted no fewer than five consultation responses since 2017 in response to various proposals for the creation and changes to the electronics tax (called the Chemicals Tax by some politicians). All of these proposals that are being sent for consultation are based on extensive and expensive investigations commissioned by the government. One of the latest consultation rounds this January on the annual over-indexation of the electronics tax by 2% failed to gather a single consultation body that was unanimously positive about the changes to the tax! Not a single one cheered or cheered. Nevertheless, it will be put on the Riksdag's table for decision.

All five of APPLiA's consultation responses since 2017 all contain the basic message that the tax, which is a national special regulation, must be abolished as it does not fulfill its function and must be replaced with strengthened work within the EU's various directives and regulations specifically around flame retardant chemicals. We saw how successful the Swedish efforts in Brussels can be when it came to the ban on many PFAS substances recently.

One beforehidden electronics tax?

Now it's that time again. Now that the election year has begun, the fifth consultation response from APPLiA is landing on the table of the Ministry of Finance. This is just three months after the last one barely had time to be read through by the finance people.

The latest memorandum from the Government is entitled ”A simpler and clearer chemicals tax”. The title gives a certain good feeling that the Government has taken on board the criticism that has been made previously and has therefore simplified this extremely complex and questionable tax. But… that is not the case.

Even higher tax burden

Instead, it may make it a little easier for the authorities to handle the tax, but more expensive and difficult for companies and private individuals. This is evident from the recently published debate article by APPLiA and the other affected industries, where you can read the following:

”"Among other things, it is proposed that products containing phosphorus will no longer be entitled to tax deductions. This means that products with already environmentally certified flame retardants will be taxed higher than today - something that risks leading producers to choose less environmentally friendly alternatives to avoid phosphorus and taxation. This would further counteract the purpose of the electronics tax and could lead to an increase rather than a decrease in hazardous substances." (Read the full debate article here.)

Private imports is made legally uncertain

In order to ease the administrative burden for the Swedish Customs when importing electronic products, it is proposed to introduce a system of flat-rate taxation for all imports and unauthorized imports of electronic products to non-warehouse keepers and private individuals. The net weight of the goods, which is otherwise the basis for taxation, does not apply to private imports. The flat-rate amounts should instead be based on the heaviest goods that are normally found on the market within each category, not on the actual weight of the goods in question. Once taxation has been carried out according to the flat-rate, a taxpayer can submit a written request to the Swedish Customs with information about the weight of the goods within two months to have the tax calculated according to the ordinary rules. Simple? No! Legally secure? No!

Non-flame retardant goods continue to be taxed

Another flaw with the electronics tax is that even products that are completely free of the specified substances are taxed and therefore do not escape the tax. Today, companies are allowed to make a deduction of 90 percent. The new proposal is that the deduction should increase to 95 percent. APPLiA's view is that substances that are not used should not be taxed at all and a 100 percent deduction must be possible in these cases.

The investigators claim that the remaining tax covers ”other potentially burdensome” substances in the product and thus the tax will remain even for these products even though they are completely free of taxable substances. They just happen to be registered under a taxable customs number (CN number).

Someone has likened this to giving fines to all driver's license holders in advance for speeding - the likelihood that they will drive too fast at some point is there!

The entire business community

There is no other tax that has been changed so many times and screwed up so much in five years, which is the short time that has passed since its introduction. This is a sure sign that the tax was unfinished and unjust even when it was introduced. The electronics tax is a national special regulation that makes it difficult to continue working within the EU towards an effective substitution of hazardous substances that the sectors, industry, organizations – yes, the entire business community – are striving for.

Now the playhouse with the electronics tax must end, roar in the polling booth for the election this fall!

Kent Oderud, Chairman APPLiA – Home Appliances Sweden

Read APPLiA's full consultation response here.