Saturday 3 December 2016

War of words over €3 charge on each car tyre

Published 02/12/2015 | 02:30

A new collection fee is being introduced for tyres.
A new collection fee is being introduced for tyres.

A war of words has blown up over a €3+ fee for the collection and disposal of car tyres. The company set up to run the scheme says the fee is already effectively being charged by retailers and that it is only making sure tyres are properly collected, disposed of or re-cycled. Those against the move insist it is a new, unwarranted tax. Eddie Cunningham outlines the official view while independent expert Padraic Deane reports on why many retailers are so angry

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The case for

Those involved in the new 'official' system say the €3 charge is not new, that is has effectively been in place as an environment/collection levy for some time.

The new system, which will kick in during the second half of 2016 will be overseen by REPAK ELT (End-of-life-Tyres) a not-for-profit organisation set up to establish, run and oversee the collection and disposal of up to 15 million used tyres lying in quarries, farms, dumps, etc, around the country.

Tony O'Sullivan is the executive strategy and planning manager at REPAK. He insists tyres are not being disposed of properly; some are being dumped, others left to rot, others exported. And that is despite existing charges ranging up to €3 for each car tyre to cover collection. He says those charges will be formalised under the new deal. It will be €2.80 (plus either 13pc or 23pc VAT). "It is not an additional charge," he emphasises.

A partial compliance scheme in 2008 (TRACS) found there were 1,600 to 2,000 economic operators - importers, retailers, part-time dealers etc - in the tyre 'business'. Half were non-compliant. There was "something of a black hole", he says.

A 2013 scheme made tyre producers fully responsible for their product from A to Z. Before then responsibility ended with the transaction. Mr O'Sullivan claims consumers have been paying on the double for tyres: through the levy and, later, in taxes when their local authority cleans up a tyre dump.

He calculates it costs 80c to have a tyre collected, leaving up to €2.20 with the retailer. And that is why there is opposition to it, he believes.

Many retailers have already partnered with REPAK on the new initiative, he claims, but others in the trade are not on board. "They are resisting this very strongly because they don't see it as their responsibility. They see their purpose as being to trade and sell tyres."

They have mounted a strong campaign, targeting politicians and Environment Minister Alan Kelly in the run-up to the election. "They are putting out misinformation that there is going to be a new tax, like water, and that there will be job losses. We would argue that there is an opportunity to create jobs, tidy up the industry and make it more difficult for the black-market guys. It will drive them out of business."

When it is up and running the new 'visible' fee will be collected at point of sale to cover collection and disposal or otherwise of the tyre.

The onus will be on REPAK and the retailers. Your old tyres will be collected by licensed operators at no additional cost to you or the retailer, Mr O'Sullivan says.

All types of tyres will come under the umbrella: trucks, tractors, buses, etc, but the latter face a much higher (yet-to-be-decided) charge.

Mr O'Sullivan says: "No tyre man will be out of pocket except they will not get the €2 'profit' (after the 80c collection fee). That's why it is causing grief." And, he claims: "There are operators too who don't want the light shining on them at all."

He expects the €3 fee to fall after the first few years. That's what happened in Italy where it now stands at €2.30.

Around 80pc of old tyres leave the country for re-use, energy recovery or recycling but that may be about to change."We are in discussions with companies and there are investors waiting on the wings for the scheme to start. If even half come to pass we will be able to eliminate all exports of tyres either through recycling or recovery. That will create jobs."

The case against

The tax will be €3.44 (incl VAT) per car tyre. That's €13.76 for four new tyres. Figures quoted privately for truck and agricultural tyres range from €12/€15 and €30+ respectively.

There has been a long line of misinformation coming from Minister Alan Kelly. His department's press release on September 25 said this "visible Environmental Management Charge will be less than €3 per car tyre". We now know it will cost more.

The minister says this is not a new tax. Of course it is because no such tax existed previously. In recent years many tyre retailers built in a small charge to cover licensed disposal. The cost of that has been and remains around €1 per car tyre. REPAK ELT recently admitted that 98c covers the collection of a car tyre. Why should motorists in the be forced to pay a new extortionate €3.44?

This is a new Government scheme, and despite repeated claims by Mr Kelly, his department and REPAK, it is unlike any other tyre-waste initiative operating in the EU. There are no similar high charges for tyre disposal in Northern Ireland. There are also plenty of examples of how new taxes applied in the Republic and not in the North have had a devastating effect on businesses, particularly in border areas.

Farm film, white goods and carbon tax on coal have had a significant adverse effect with losses of jobs and revenue to the State. There is a genuine belief the tyre industry will follow the same route, and that assurances on enforcement with not be delivered upon.

Mr Kelly, his department and REPAK regularly speak about millions of waste tyres in dumps. This figure is greatly exaggerated; the EPA concurs the figures are negligible. The handful that have been exposed with large numbers of waste tyres were owned by collectors licensed by the department itself.

Additionally, with selective quotes, they also say there's a lack of compliance, but this is contrary to CSO figures which have shown tyre-trade compliance as high as 90pc in the previous scheme.

In addition to handing competitive advantage to tyre companies outside the State and the possibility of up to 1,000 job losses, the black market will get a big boost, particularly in border counties. It also follows that other revenue streams such as VAT, income tax, etc, will be lost to the North. Taxpayers have a right to ask why the operation of this scheme was not put out to tender by Mr Kelly's department.

Tyre manufacturers have always said they want to take responsibility and support the 'polluter pays' principle, but the proposed scheme does not fulfil their interpretation of a PRI (Producer Responsibility Initiative) as replicated anywhere else in the EU. All have declined Repak ELT's offer to become directors of the new scheme.

The vast majority in the Irish tyre industry see this new scheme as being unfit for purpose, and have serious concerns about inefficiencies and taxpayers paying excessively to the two agencies to operate it.

Indo Motoring

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