No. 474 - Local waste taxes in Italy: benefit or (hidden) wealth taxation?

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by Giovanna Messina, Marco Savegnago and Andrea SechiDecember 2018

Waste management can be financed through user charges, in the form of fees related to the amount of waste produced. Such fees would lead to positive effects for local public finance as well as for the environment. In Italy waste management is instead financed through a local tax (Ta.ri.), which is essentially a wealth tax. The paper examines Ta.ri. both from an efficiency and from an equity point of view, by means of a simulation using the Bank of Italy survey on household income and wealth.

Our results indicate that Ta.ri. cannot discriminate among families according to the amount of waste they produce and that this tax weighs more heavily on poorer families. If waste taxation were redesigned so as to become more similar to a fee, tax payers would be encouraged to be more responsible in their use of resources, and the regressive impact of the current system of taxation would then disappear.