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  Business Times 4 Jun 07
HK may impose 50-cent tax on plastic bags
By Jane Moir in Hong Kong

HONG KONG'S first attempt at a 'green tax' is likely to be levied early next year as the city tries to clean up its environmental act - but the move faces plenty of opposition.

Customers will have to pay 50 HK cents (10 Singapore cents) for each giveaway plastic bag under a tax the authorities have grappled with for decades but never got around to introducing.

But now is the time if ever there was one. Hong Kong disposes of 1,000 tonnes of plastic bags every day - the equivalent of 33 million of them. With limited space, the use of landfills is an acute issue in a city dogged by air pollution, filthy water and high levels of construction waste.

The plastic bag tax will be introduced by the Environmental Protection Department in phases, with supermarkets and convenience stores among the first affected. Retailers who flout the law can be fined a maximum HK$200,000. The move will generate about HK$200 million a year for the government.

But not everyone is in agreement. Lawmakers representing the retail and wholesale sectors say the bag levy will complicate the tax regime.

The Hong Kong Plastic Bag Manufacturers' Association claims the move will not cut bag use in the long run and says the daily disposal rate is exaggerated.

'We're already seeing mixed responses,' says PricewaterhouseCoopers tax partner Guy Ellis. 'Some support the idea while others say it is a gimmick.' For years, a plastic bag tax, as well as one for used tyres, has been on the cards.

'I think time will tell how effective it is,' says Mr Ellis. 'My own view is that moving towards some sort of green taxation is something other governments have done and something the Hong Kong government should consider.'

Friends of the Earth assistant director Edwin Lau is confident people will support the move to tax plastic bags. 'Most of the public feel environmental problems are bad and there is excessive use of plastic bags, especially in supermarkets,' he says. 'We fully support the government's proposal. It's something simple they should be able to do in a civilised way.'

In the past, however, the authorities have succumbed to pressure from vested interests when proposing new taxes.

Last year, for example, the government backed down on a proposal to introduce a goods and services tax. The move got scant political support and a GST was seen as a tax that would punish low earners.

Although the government is no longer advocating a GST, it is still looking for ways to widen its tax base, which is heavily reliant on land premiums.
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