Getting to the bottom of things!

Three billion nappies are thrown away in the UK each year, 90% of which will end up in landfills, with the majority of the remaining being incinerated. With our landfill sites rapidly filling up and global warming on the increase, our environment is suffering. Furthermore, council budgets are being strained in order to cope with the costs of nappy disposal, ranging from £300,000 to £1 million per year. Therefore, implementing a specific tax of 2 pence per disposable nappy may just be the solution to this bottomless problem.

Image copyright: Mario A. Magallanes Trejo, from stock.xchng.

How is the tax going to be calculated, I hear you say? Approximate calculations suggest that in England, 700,000 babies are born each year, most of whom will end up using disposable nappies. Assuming babies take three years to become potty trained, the total number of babies using nappies each year would amount to 2,100,000. If each baby uses about 1,600 nappies a year, the total number of nappies being bought a year will be 3,360,000,000 - now that's a lot of nappies! By proposing a 2 pence tax per nappy, using the above figures, the total amount of tax collected would amount to £67,200,000! Now that's even more significant!

Just in case it hasn't sunk in yet, the women's environmental network estimates 3 billion nappies are thrown away each year. Using these figures, the tax collected would amount to £60,000,000.

And now for the million dollar question: who is going to pay the tax? The tax will be paid by parents who buy disposable nappies. Since the tax is a specific tax, it internalises the externality, because people who are creating the waste are paying for its disposal. It is estimated that a child will use between 4,000 and 6,000 disposable nappies from birth until they are potty trained. The addition of the tax will mean that over the entire period a child is in nappies, the parents will only pay an extra £100. This amount is relatively insignificant as it is only a 10% increase in the amount parents pay overall.

While we are aware that the tax may place a burden on lower income families, there is still a cheaper option available in the form of real nappies.

The tax has several beneficial implications.

• Firstly, the environmental benefits: the tax will increase the price of disposable nappies, which acts as a larger incentive for parents to use reusable nappies. It is estimated that over a two-and-a-half year period, parents using disposable nappies will spend around £1.000. However, parents using reusable nappies will only spend £300 (this also includes spending on washing etc.). With a much cheaper alternative readily available, it is hoped more parents will choose to use the reusable nappies, therefore reducing the amount of disposable nappies in landfills.
• Councils will also benefit if the number of disposable nappies are reduced. This is because it is estimated they spend between £500,000 to £1 million solely on nappy disposal each year. Hence it may become possible for them to reduce council tax.
• Governments also gain about £67,000,000 in added tax revenue. This money can be invested into research and development of new types of disposable nappies that are more environmentally friendly, as well as into incentives for parents to use real nappies.
• Additional tax revenue can also be used to promote environmentally-friendly initiatives such as subsidies to councils to provide cleaning services to parents using real nappies.

Landfill site. Copyright: Roberto Burgos, from stock.xchng.

Why is this a good way for the government to collect such a tax?

The price elasticity of demand for disposable nappies is inelastic because they are a necessity to some extent. This is because some working mothers find it more convenient to use disposable nappies than to wash real nappies.

This implies that the small increase in price due to the tax will not cause a major change in demand for disposable nappies in the market. Thus the government will then be able to increase its revenue through this tax, making the tax an effective one.

Also, consumers will not be able to evade the tax, as the tax is already factored into the price of each nappy bought. It is also easily calculated and straightforward.

In conclusion, here are a few interesting facts to consider about disposable nappies:

• They account for 2.6% of the average household rubbish a year.
• That is equivalent to the weight of 70,000 double-decker buses
• When the buses are lined up from end to end, they would stretch from London to Edinburgh.

Using real nappies not only reduces the amount of waste sent for incineration but also the amount of energy and non-renewable resources used to produce disposables.

This tax would be successful and relatively easy to implement. Since the amount of tax levied on each customer is such a small percentage, the effect would be quite negligible on most UK parents. However, the benefits gained from this tax far outweigh the costs of implementing and collecting it.

Sources

• Women's Environmental Network
• BBC News
• Tesco
• Mid Sussex District Council
• The Real Nappy Campaign