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Washington Watch: Plastics tax pushed by Democrats as party debates $3.5 trillion budget bill

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A pair of congressional Democrats are pushing a tax on so-called virgin plastics, as the party continues to work on crafting its $3.5 trillion climate, education and healthcare package.

On Tuesday, Rep. Tom Suozzi of New York introduced legislation with Sen. Sheldon Whitehouse of Rhode Island that would put a 20-cent-per-pound fee on the sale of new, or “virgin,” plastic used in single-use products. The fee, said Suozzi’s office in a press release, “would incentivize the use of recycled plastics and would hold the plastic industry accountable for its harm to the climate, oceans and minority and low-income communities.”

Whitehouse unveiled plastics-tax legislation in August. The proposal has received fierce pushback from the American Chemistry Council, whose members include DuPont
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Nearly 40 chief executives of the council’s member companies signed a Sept. 13 letter to congressional leaders calling the proposed tax “punitive, discriminatory and regressive” and arguing it would especially harm lower-income families.

In the last 10-plus years, traditional fossil-fuel companies have invested $89 billion in 210 chemical projects linked to America’s shale gas boom, according to the American Chemistry Council. More projects are planned, according to the trade group and energy-market associations. Petrochemicals make up 99% of all plastics.

Analysts at Beacon Policy Advisors noted Wednesday that the Senate Finance Committee is considering a plastics tax and “will weigh the revenue raising pros against the cons,” including opposition from the American Chemistry Council. The House Ways and Means Committee, however, didn’t include it in their bill.

Democrats are trying to hammer out the details of their $3.5 trillion bill. Meanwhile, progressive House Democrats continue to insist they won’t support a separate infrastructure bill unless the $3.5 trillion package moves ahead in tandem. Moderate Democratic senators oppose the larger measure’s price tag.

Now read: Pelosi signals House vote on bipartisan infrastructure bill may not occur Thursday

Beacon analysts say there’s a chance the plastics-tax idea proposal could arise again even if Democrats don’t make it part of their so-called reconciliation package this fall. Budget reconciliation is the process by which Democrats are aiming to pass the $3.5 trillion plan, and requires only a simple-majority vote.

“Even if this specific proposal is not more widely taken up and incorporated into budget reconciliation, the idea of a plastic tax is not completely off the table — especially as Democrats are still mulling broader environmental taxes including a carbon tax — and as the Senate Finance Committee included a 20-cents-per-pound excise tax on sales of virgin plastic as a potential revenue raising option in a document circulated earlier in September,” the analysts wrote.

Also read: Oil industry avoids pain in House Democrats’ tax plan, but tobacco, vaping get hit

Under the Suozzi-Whitehouse proposal, manufacturers, producers and importers of virgin plastic resins would pay 10 cents a pound in 2022, increasing gradually up to 20 cents a pound in 2024. The fee would apply to virgin plastic used to make single-use products including beverage containers and bags.

The executives who signed the American Chemistry Council’s letter say that the proposal would “directly violate” President Joe Biden’s pledge not to raise taxes on Americans making less than $400,000.

And they make clear their expectations that the higher costs will be passed on. “Such a punitive, discriminatory and regressive tax would not only harm U.S. companies competing internationally, but also harm American consumers, especially lower-income families who can least afford higher prices on essential products,” the letter said.

The letter outlines alternatives including requiring all plastic packaging to include at least 30% recycled plastic by 2030 through a national recycled plastics standard.

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