Santa Claus is coming to TAX
Ever thought of Christmas as a festival of waste? During Christmas, around three million tonnes of waste fills millions of wheelie bins. Last year, approximately eight million Christmas trees were sold in the UK, of which only 10% were recycled and fewer than 5% planted to be re-used next year. To give you an idea of waste created just by Christmas trees, 6 million trees is enough to stretch end to end from London to the North Pole and back, covering over 3,588 miles.
Image copyright: Gavin Mills, from stock.xchng.
We propose a specific tax, taxing each real, cut Christmas tree by height according to the table below.
| Height | Tax money |
|---|
| Smaller than 8 feet | £5 |
| Between 8 - 20 feet | £10 |
| Taller than 20 feet | £20 |
When a Christmas tree is bought, the buyer would receive a tax receipt, with clear detail of the height of the tree. If the buyer wants to reclaim the tax, he has to present the tax receipt to be stamped when he takes his tree to any of the recycle sites. This should encourage people to recycle their trees. It also avoids the creation of black market, as some people might go around and cut trees down to claim the tax refund.
If only 10% of the Christmas trees with average height 7.5feets bought annually would be recycled, the government could receive £36,000,000.
What benefits could the tax bring about (apart from more tax revenue)?
The UK is one of the best European countries when it comes to recycling. However, some of our action maybe seen crazy to other nations; cutting down these environmentally friendly trees and transporting them miles to be displayed in our houses for no more than a month. At the end of the season, most of us throw them out.
We are trying to balance the need to preserve the environment as well as to maintain the traditional festival using this tax.
This tax is aiming to promote better practice. Since this tax is refundable, people will have an incentive to go to the recycling facilities and recycle their Christmas trees which can either be transferred into gardening mulch or used to make woodchips to create new forest paths, which would help global warming in the long run.They can be used as bird feeders, wood products can be made from their stems or they can be used as wildlife cover in fish ponds and woods alike. In addition to that it would boost the recycle rate of other Christmas items, such as cards, gift wraps and plastic cutleries. This would reduce the landfill use to store waste. It may seem insignificant but every year, Envirowise 'estimated that 83 square kilometers of wrapping paper end up in our rubbish bins; that is enough to wrap up Guernsey (78km2)' and 'Up to one billion Christmas cards, or 20,000 tonnes are taken to landfill where they will still be languishing 30 years later.'
The revenue generated should be spent purely on environmental purposes; namely the government can provide more recycling facilities around the UK, which in the long run should bring long term positive externalities; especially since the environment is such a current big concern.
Many Christmas tree retailers now offer an after sales service: during the second week of January, they collect the Christmas tree from their customer and recycle the tree for them. This suggests that an increasing number of the British public are actually aware of the problem and would pay extra for the service. Government can encourage firms to develop this scheme efficiently, by giving grant from the generated revenue. From this more jobs around Christmas may be created. With more recycling facilities being build it may be able to create more jobs in the UK.
Why is this a good way for the government to collect tax revenue?
Christmas trees are one of the most popular traditions at Christmas, which is hugely celebrated in the UK. Therefore the price elasticity of demand of a Christmas tree is inelastic. Nevertheless, the marginal propensity to spend for Christmas shopping is high when compared with other times in the year. These two factors suggest that the slight increase in the price of Christmas trees would result a less than proportion decrease in demand.
Furthermore, this tax is not evadable. Since the tax is placed on the Christmas tree as it is being sold, the customers have no choice to pay for it, and would get it back only if they recycle the tree. Thus, there is a fear that the public would then switch to the obvious alternative: the artificial Christmas tree which can be re-used every year. However, the price of an artificial tree is much higher than a real Christmas tree. Also, real Christmas tree farms are haven for birds and mammals as they provide an excellent habitat for the animals. Nevertheless, just one acre of Christmas trees produces enough oxygen to support eighteen people. Balancing these benefits, it would be clear that a real Christmas tree is better than an artificial fake Christmas tree in many ways!
The government would not receive the tax revenue through this scheme ideally, as the consumers would get their refund. However, not everyone would recycle the tree in reality so any tax received through the retained tax could be spent directly on environment issues such as investing in the recycling facilities. Thus, the government does not need to spend extra money to develop the service.
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