Refundable bottle deposits 2

Re last weeks Fun Online Poll, on the subject of refundable bottle deposits.

The Surfers Against Sewage website that promotes this, says the following:
The system would be largely self-funded through the small proportion of unclaimed deposits.

Evidence from existing systems shows that this is not entirely true, not too far off either, but so what - what's the point of a system that has to be used less than optimally to be funded?


Norway has had refundable bottle deposits for a long time, the reverse vending machines have been in shops since the 70s, and the current legislation/system is structured in quite a nifty way. From the outset, all drink bottles and cans are subject to a tax per bottle. After all, the most efficient and sensible way to pay for refuse treatment is for it to be pre-paid. There's no compulsion to join the deposit-refund scheme, and if producers find it's not worthwile, they don't. They can however join the scheme, through a member-owned organisation that handles the return and refund bit. The tax per bottle is then reduced in stages, until it's reduced to zero if 95% of more of the bottles are returned and handled.

The economics of this can be read from the 2015 annual reports of Infinitum, the cleverly named company reponsible for the scheme (in Norwegian).
Annual operating/admin costs before deposit refunds: 438 million NOK.
Net deposit income after refunds: 206 million NOK
Sale of materials: 124 million NOK
Net costs, of which most are paid by producers, and ultimately passed onto consumers, are around 108 million NOK.
This works out at around 1p per bottle/can that is run through the system, compared to the alternative tax which is slightly more than 30p.

For this you get the benefit of virtually no bottles and cans lying around or drifting off the coasts, and an easy source of pocket money for the kids. Both producers and consumers are left with the choice of partaking in the scheme / returning the containers or not, but enough people do so, and between 80-90% of bottles and cans are returned.

You can basically apply this principle to most products and materials, and the degree of intervention isn't very high except for the tax - importers/producers work out the particulars amongst themselves as long as the end-result is satisfactory.

The F-Word

When most people think about paying for Government services, they believe this should be based upon the ability to pay. This contradicts what we think is fair when paying for private goods and services. Why the difference?

I believe it is to due the mistaken belief we pay compensation to the Government for the services it provides. The poor therefore need subsiding by the rich. 

The correct view is we  pay (or should pay) compensation to the community for benefits we receive  from it. Out of which, how we best divvy up the proceeds is a separate topic. Take note faux-Libs. 

We earn an income, then buy capital, which benefits everyone. Unlike income and capital, Land, by definition, is not reproducible. Exclusive occupation of productive Land is therefore the main* burden we place upon the community. It is the permission to exclude others that is the benefit we should be paying for. Measured by the market, as the rental value of Land.

It is not therefore a "tax" but a user fee. Which perfectly aligns with the same incentives as drives the rest of our economy. And, joyfully, we get a fair distribution of income, capital and welfare (in the economic sense) as a result.

At its base, Capitalism is all about paying market based compensation. It works because it is fair. When we apply this to landownership, and other negative externalities, we get a fair and efficient way of paying for services we share.

* other burdens, or negative externalities, include State granted monopoly rights, and pollution.

Eh?

From the BBC

The government should spend £1bn a year from the money it collects in fuel duty to fix potholes and crumbling roads, the body that represents councils in England and Wales has said.

The Local Government Association says taking 2p from the fuel duty of 57.95p per litre could clear a "backlog".

Roads are only being "patched up" under current funding levels, it argues.

Ministers say £24bn is being spent on roads between 2010-21, with an extra £200m in 2014 available for potholes.

We already have a tax, called Vehicle Excise Duty, formerly called the Road Fund License that was named for this purpose - you want to get on the road network, you pay for the network. We then have fuel duty as a usage/pollution/congestion charge. And VED raises over £5bn/annum of which £2bn is spent on roads.

So, as there's £3bn/annum not being used for roads that comes from VED that should be, and you want £1bn/annum extra spent, why go after fuel duties instead of the VED not being used for its proper purpose?