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Understanding the waste tyre management fee

Understanding the waste tyre management fee

May 6, 2015

A tax is a compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions. Money collected from taxes goes into the general fiscus. Comparatively, a waste management fee is paid by product producers and importers, and is used for dealing with the product when it reaches the end of its life cycle.

This money is directly and specifically applied to dealing with the product, in an audited and accountable fashion, making it far more effective than a tax-based system where funds sink into the general Treasury and are not ring fenced.

The way to get worth from waste is to turn it into something that people will pay money for, and the way to do that is to create a circular economy. Instead of making a product for consumers to throw away, we need to extend the life of the product beyond the consumer stage by recovering, recycling and reintroducing it into the economy.

Experience shows that where manufacturers are encouraged to regulate themselves, some do and some don’t. Some pay and some won’t. In Germany, 60% to 70% of tyre manufacturers at most pay an industry body to discharge their extended producer responsibility for them. Here in South Africa, the figure stands at 99.8%.

The difference is that in Germany, extended producer responsibility is voluntary; in South Africa, it is mandatory. By law, every tyre manufacturer and importer must pay a waste management fee of R2.30 per kilogram to the Recycling and Economic Development Initiative of South Africa (REDISA), an industry-independent body that shoulders their recovery and recycling liability for them.

However, given the lack of success following the plastic bag tax, it is reasonable to query what the difference is between that, and the REDISA waste management fee.

While the money collected from the plastic bag tax still goes directly into the fiscus, funds collected by REDISA are paid directly to the organisation and there is no government involvement. REDISA then allocates spend of the money as clearly outlined in the gazetted REDISA Plan.

One of the key challenges of the plastic bag levy is that the funds collected go directly to the government fiscus. Therefore the Department of Environment Affairs (DEA) has to apply to the Treasury to get any of that money back in order to set up the promised recycling industry. When the REDISA Plan was established, Minister Molewa emphasised that the waste management fee collected would not end up in the general fiscus. The advantage of this is that REDISA is 100% accountable for what happens with the funds. This is monitored annually by an external audit partner, KPMG.

REDISA director, Stacey Davidson, said that “Once tyre manufactures pay the waste management fee, the manufacturers will not be required to handle the recycling of the tyres themselves. Instead, REDISA has taken over this responsibility and is ultimately developing an industry whereby old tyres are being recycled into new products.”

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