In a sweeping reform aimed at modernizing waste management and meeting European Union environmental directives, Greece has introduced significant changes to its landfill tax policy. These reforms signal a commitment to improving recycling rates, reducing landfill reliance, and fostering sustainable practices across the country.
What Is the Landfill Tax?
The landfill tax (τέλος ταφής) is an environmental tax levied on municipalities for waste disposal in landfills. Its primary purpose is to incentivize recycling and other waste management alternatives by making landfill use financially burdensome. Greece’s recycling rate stood at a mere 17.3% in 2022, well below the EU target of 50%, making these changes not only timely but essential to avoid EU-imposed fines.
Key Changes in the Landfill Tax
- Increased Allocation for Recycling Efforts:
- 85% of the landfill tax revenue will be redirected to municipalities for enhancing recycling infrastructure and equipment. This includes support for small, remote municipalities under 10,000 residents.
- The remaining 15% will fund the closure and restoration of illegal or non-compliant landfill sites, further addressing environmental hazards.
- Streamlined Collection:
- The tax will now be collected directly through municipal fees and transferred to the Hellenic Recycling Organization (ΕΟΑΝ), ensuring accountability and transparency in its usage.
- Municipal Budget Adjustments:
- To ease the transition, the government has pledged a €70 million increase in resources for municipalities. Additionally, outstanding tax obligations from previous years will be reconciled through offsets and budgetary adjustments.
- EU Compliance and Funding:
- The reform aligns Greece with EU waste directives, avoiding penalties and unlocking funding opportunities from the EU Recovery and Resilience Facility (RRF) and the 2021–2027 Cohesion Fund.
Broader Impacts on Tax Policy and Municipalities
The landfill tax reform has significant implications for Greece’s fiscal and environmental landscape:
- Environmental Gains: The tax aims to drive a cultural shift toward recycling, reducing the environmental footprint of waste management.
- Economic Redistribution: By reinvesting tax revenue into local governments, the policy ensures that municipalities have the tools to meet their obligations, fostering equity and efficiency.
- Integration with Local Tax Systems: The inclusion of the landfill tax within municipal fees simplifies its collection and ensures that its costs and benefits are localized.
- Public Accountability: Municipalities are encouraged to develop and implement holistic recycling plans, creating a transparent and results-oriented approach to waste management.
Incentives for Local Governments
To further support the transition, the Ministry of Environment and Energy has introduced reward programs for municipalities that achieve recycling targets and reduce landfill dependence. Funded through revenues from the plastic bag tax, these programs will incentivize innovation and accountability at the local level.
A Model for Sustainable Growth
The landfill tax exemplifies how fiscal policies can be leveraged to drive sustainability. By aligning environmental objectives with economic incentives, Greece is not only addressing an urgent waste management crisis but also laying the groundwork for a greener, more resilient future.
