- An excise tax on plastic is currently being considered
- The Senate Finance Committee is exploring many additional revenue generating options
In another attempt to fund the $3.5 trillion budget for Biden’s infrastructure bill, there was a proposed tax on single-use virgin plastics. Many suggested tax hikes have crossed the plate in an effort to make up for the pricey spending of the bill; however, this caught the attention of many as the excise tax is being seriously considered.
Tax Summary
The tax proposed in the REDUCE Act (Rewarding Efforts to Decrease Unrecycled Contaminants in Ecosystems) would weigh in at $0.10 per pound in 2022 on the sale of virgin plastics used for single-use plastics, with a gradual increase to $0.20 per pound in 2024. This as a whole would aid in raising money for the government, as well as push the market towards the use of recycled plastics.
This tax was originally proposed by Sen. Sheldon Whitehouse, and re-introduced by Rep. Thomas Suozzi (D-N.Y.) with some edits. Suozzi was quoted saying, “This bill with Senator Whitehouse is a commonsense way to create an economic incentive for businesses to use recycled plastic instead of creating more new plastic waste.”
Potential Impact
When looking at this from a different standpoint, a plastic tax would have a large effect on the price of consumer goods. This levy would put an additional cost on most products that use packaging, likely causing an increase no matter the brand, until competition drives alternative solutions to get around the tax. The burden of this extra cost would most likely be pushed down to the consumer, causing price increases on various goods – a big one being food.
Wrap Up
This tax was not included in the bill approved by the House Ways and Means Committee earlier this month, however, it has been re-circulating recently with the updated proposal. It is just one of the revenue-raising options under consideration by the Senate Finance Committee, which is looking to make ends meet for the planned government spending.
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