State Experiences With Taxes on Generators or Disposers of Hazardous Waste

Pursuant to a congressional request, GAO obtained information on taxation of generators and disposers of hazardous wastes. Taxes of this type are known as waste-end taxes. GAO examined the operation of waste-end taxes in three states in an attempt to determine: (1) whether states have achieved their objectives in establishing waste-end taxes; (2) states' concerns about a proposed federal waste-end tax; and (3) potential problems in establishing and implementing a federal waste-end tax.

States generally establish waste-end taxes to: (1) generate revenue for state hazardous waste cleanup efforts; and (2) encourage more desirable waste management practices, such as waste recycling. GAO found that: (1) in each state reviewed, the revenue generated by waste-end taxes fell short of anticipated revenue; and (2) none of the states had the information necessary to determine whether their waste-end taxes are encouraging desirable waste management practices. GAO also found that states are concerned about a federal waste-end tax because: (1) it could preempt state waste-end taxes; (2) imposing a federal tax on top of state waste-end taxes could increase the incentive to illegally dispose of wastes to avoid the tax; and (3) the more successful a waste-end tax is, the less revenue it generates, because waste generators and disposers are more likely to shift to tax-exempt alternatives. GAO compared three legislative proposals that would establish a federal waste-end tax and found that implementing each would require information on the types and quantities of hazardous wastes generated, and the treatment, storage, or disposal methods used. The Environmental Protection Agency (EPA) does not currently have adequate information available to meet the information needs of a federal waste-end tax program, but is implementing a reporting requirement for states that will provide some of the necessary data. EPA and other agencies have not yet estimated the time or cost to implement a federal waste-end tax.