SSRN Research Paper Series

This paper develops quantitative scenarios of the effects of a packaging tax in Germany. We analyze the potential and challenges of efforts to reduce the volume of packaging materials by increasing the costs for the economic actors. A structural model is developed based on conceptual considerations and empirical results that allow us to discuss and quantify different aspects of market reactions along the value chain (volume reduction, substitution effects, use of reusable packaging). The assumptions about the reaction of actors along the value chain (consumers, retailers and manufacturers of finished and intermediate goods) are based on theoretical considerations and empirical results from existing literature and on expert interviews. The analysis shows that there is limited potential to reduce the amount of packaging materials by introducing a packaging tax. A significant part of the cost increase caused by the tax is passed on to consumers. As packaging costs account for only a small share of average products, the market reaction of consumers is likely to be limited even if the tax rate is increased. We estimate the aggregate reduction in the volume of packaging material at around 8% (tax of €750 per ton for plastic material, tax rates for other materials based on CO2-equivalents) to 12% (tax rate of €2,250 per ton plastic material). Changes in the assumptions only have a minor influence on the expected outcome, leading to a reduction effect of about 14% instead of 12% in the scenario with the highest tax rate.

Elsevier

DOI: 10.2139/ssrn.6393401