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Tea in 1776, Coffee Today: The British are Taxing! The British are Taxing!

March 21, 2018
Caffeine has been heralded as the world’s most popular drug. However, as more people want their coffees to go, the industry has failed to confront the waste from single-use cups. In the last two decades, the United Kingdom has seen a 400% increase in the number of coffee shops. The sheer volume of waste affects both the environment and the country’s waste management infrastructure [1][2]. In the UK alone, people throw away 2.5 billion disposable coffee cups a year [3]. The scope of this problem is magnified by the difficulty of recycling wax-lined paper (the most common material for coffee cups), with only 0.25% of these cups being reprocessed [4]. In order to combat the growing practical and environmental effects of throwing away single-use cups, UK lawmakers have stepped in, and are considering instituting a “latte levy,” a new tax to influence on-the-go coffee drinkers.

 According to a report from the House of Commons, the British Parliament is considering introducing a 34-cent (25-pence) tax on each single-use coffee cup sold in the country. The revenue from this proposal would be reinvested in developing reprocessing facilities and “binfrastructure”—an initiative to ensure that the paper cups still in use could be recycled efficiently [2]. Though the government certainly expects some revenue from this proposal, the ultimate goal of the tax is far from fiscal. Rather, the policy is primarily environmental, intended to influence consumers to buy and use reusable travel mugs for their coffee—drastically reducing the amount of waste they produce [5]. As such, lawmakers are attempting to frame this proposal not as a tax on consumers, but rather as a financial incentive to switch to reusable travel mugs. In addition to the immediate tax, an even more ambitious aspect of this proposal comes further down the line, with some lawmakers pushing for all single-use coffee cups to be recycled by the year 2023. If this goal isn’t realized, officials are advocating for an across the board ban on disposable coffee cups [2].

(Image: The amount of trash collected from UK beaches rose 10% in 2017. Source: MCUSK.) (Image: The amount of trash collected from UK beaches rose 10% in 2017. Source: MCUSK.)

Though some of these proposals seem far-fetched and implausible to implement, there is some historical evidence that similar policies have achieved their desired goals. The most applicable example comes from October of 2015, when the British government instituted a 5-Pence tax on single-use plastic bags. Despite some consumer resistance, this legislation achieved its desired effects: within only six months, plastic bag usage dropped 85%. Rather than simply raising the price on single-use bags (and indirectly all shopping), the policy motivated shoppers to use fewer bags. In fact, in the first year alone, British consumers used whopping six billion fewer bags than the year before [6].

Even if banning single-use cups in 2023 (if the recycling goal isn’t reached) seems unattainable, it would not be the first example of this type of policy. In November of 2016, California voters approved Proposition 67, a statewide ban on single-use plastic bags [7]. Though there was resistance to change, Californians quickly adjusted to the absence of roughly 13 billion plastic bags from their state. Instead, shoppers opted either for reusable bags, or for sturdy paper bags at 10 cents each [8].

Despite the clear ecological benefits of this “latte levy,” some consumers are reluctant to accept the cost, and see the tax as just another way that the government is passing financial burdens on to consumers [9]. This discontentment from some citizens is exacerbated by the high cost of the tax, which would make the average cup of coffee a non-negligible 10% more expensive. Consumers who are unwilling or unable to make the switch to reusable cup will be faced with a new financial burden placed on an integral part of their daily routine.

(Image: Total MSW wast. Source:  EPA.) 

(Image: Total MSW wast. Source: EPA.)

With the amount of waste produced growing every year, there is little question that something must be done to reduce the amount of pollution [10]. This proposal offers an ambitious change to the way people drink coffee, and completely eliminates coffee cups from the United Kingdom’s waste stream. As this tax is debated and discussed, lawmakers and voters will need to decide if they are willing to bear the added expense in an effort to reduce the impact they leave on the environment.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

References

  [1] https://www.theatlantic.com/science/archive/2016/03/worlds-most-popular-drug/474831/

  [2] https://publications.parliament.uk/pa/cm201719/cmselect/cmenvaud/657/657.pdf

  [3] https://www.parliament.uk/business/committees/committees-a-z/commons-select/environmental-audit-committee/news-parliament-2017/coffee-cups-report-publication-17-19/

  [4] https://www.ecowatch.com/4-billion-starbucks-to-go-cups-thrown-away-each-year-recyclable-cup-1935687814.html

  [5] https://www.npr.org/sections/thesalt/2018/01/17/578655161/u-k-lawmakers-want-to-battle-waste-with-a-latte-levy-on-disposable-cups

  [6] https://www.theguardian.com/environment/2016/jul/30/england-plastic-bag-usage-drops-85-per-cent-since-5p-charged-introduced

  [7] http://www.sacbee.com/news/politics-government/capitol-alert/article113898813.html

  [8] http://www.latimes.com/opinion/editorials/la-ed-plastic-bag-ban-anniversary-20171118-story.html

  [9] https://www.express.co.uk/news/uk/900465/latte-levy-coffee-tax-disposable-cup-MPs

  [10] https://archive.epa.gov/epawaste/nonhaz/municipal/web/html/

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