New Charges on Communal Waste in the Czech Republic

New Charges on Communal Waste in the Czech Republic Presented by: Dr. Radvan Date: 24 November 2022 Background - Until the end of 2021, there were two (with contract system three) possibilities to collect charges for municipal waste management in the Czech Republic. - It was up to the municipality to choose the better charge on communal waste according to the local conditions. - Prague chose the waste act charge because many individuals are working there but have permanent residence in another municipality. The main problem in Prague's charge administration was finding the payers - persons producing communal waste. - Brno has chosen local charge because it is very easy to find all the taxpayers thanks to existing public registries of individuals and real estate. But in practice, it might happen that an individual had to pay twice (this person has a permanent residence in Brno but actually lives, works, and produces waste in Prague) or did not pay at all (if s/he has a permanent residence in Prague and lives in Brno). New Regulation - Adopted at the end of 2020 - Too late for the municipalities to adopt the local bylaw (transitional provisions allowed to use of current charges in 2021) - Charge for the municipal waste management system - tax on head - Charge for the disposal of municipal waste from immovable property based on the payas-you-throw principle Charge For The Municipal Waste Management System - Paid by natural persons registered (with a permanent residence) in the municipality or the owner of immovable property comprising an apartment, a family house, or a building for family recreation in which no natural person is registered and which is situated in the territory of the municipality - Exempted persons by the act are those liable for the charge for the disposal of municipal waste from immovable property in another municipality, children placed in specific facilities of immediate assistance, people placed in homes for the disabled, for the elderly, or in sheltered housing, and those restricted in the personal liberty by law - Municipality is free to set additional exemptions - Charge rate is fixed and shall not exceed CZK 1,200 per year Charge For The Disposal Of Municipal Waste From Immovable Property - Paid by the natural person who resides in the immovable property (waste producer) or the owner of immovable property in which no natural person resides - Payor (paying agent) with a duty to collect the charge from the taxpayer is a unit owners' association (for the blocks of flats) or the owner of the immovable property - Municipality has to specify the tax base in the ordinance - Tax base might be the weight of the waste in kilograms, the volume of the waste in liters, or the capacity of the waste bin in liters - Municipality may set a minimum monthly tax base of 10 kilograms/60 liters - Tax rate is fixed and cannot exceed CZK 6 per kg if the tax base is the weight of the waste or CZK 1 per liter if the tax base is the waste's volume or the waste bin's capacity Rules For Both Charges - Self-application principle the taxpayer and the payor are responsible for the announcement to the tax administrator (municipal office) and the payments; if a municipality has established the charge for the disposal of municipal waste from immovable property and has selected the weight of the waste in kilograms or the volume of the waste in liters as a tax base, the self-application principle cannot be used. - Time limits must always be set in the generally binding ordinance - Municipality may further regulate in a generally binding ordinance: other exemptions from the charges, charge reductions, the exclusion of the announcement obligation, and a longer time limit for notification of changes than set in the Local charges Act - Taxable period is one calendar year, and the act concerns a partial tax period one month - If the charge is not paid on time, the tax administrator may increase the unpaid charges or part thereof up to three times Charge Pros Levy on the basis of a Regulative and stimulation contract effects for waste sorting • • • • • • Waste act charge • • • Waste producer pays Possibility to tax all waste producers Possibility to add exemptions in ordinance • • • • Local charge on communal waste • • • • Easy to identify the taxpayer Specific rules for minor taxpayers' tax debts Possibility to add exemptions in ordinance Specific rules for tax administration • • • Cons Impossible to combine with other charges on communal waste Impossibility to force persons to sign a contract Unclear title Undetailed legal regulation, inc. The taxpayer Unlimited tax rate No tax administration procedures Impossible to tax empty properties Difficult to identify the taxpayer Administered by tax code without specifics for such a charge, incl. Sanctions No specific rules for minor taxpayers' tax debts Double payments People without residency do not pay Unclear term "reduction of the charge" Charge Pros Charge for the municipal Easy to identify the taxpayer waste management system exemption if the charge for the disposal of municipal waste from immovable property is paid elsewhere specific rules for minor taxpayers' tax debts possibility to add exemptions in ordinance specific rules for tax administration Charge for the disposal of • Waste producer pays municipal waste from • Possibility to tax all immovable property waste producers • Specific rules for minor taxpayers' tax debts possibility to add exemptions in ordinance follows pay-as-you-throw principle motivation for waste sorting • Minimal tax base • Specific rules for tax administration • • • • • • • Cons People without residency do not pay Unclear term "reduction of the charge" Difficult to identify the taxpayer Payor's role in the case of taxpayers' debts Unclear term "reduction of the charge" The construction of tax base difficult for tax administration Cannot be collected during the year if the weight of the waste or the volume of the waste is used as a tax base Conclusions - The charge for the municipal waste management system is, to a certain limit, a modernized version of the local charge on communal waste. The added exemption if the charge for the disposal of municipal waste from immovable property is paid elsewhere means that nobody should pay the charge on communal waste twice. - The charge for the disposal of municipal waste from immovable property is a new form of communal waste charging based on the pay-as-you-throw principle. It is still difficult to identify the waste producers, even if this obligation was more or less delegated to the payors. The charge seems to be a good motivation to waste sorting, especially in combination with ith a minimal tax base and three possibilities of the tax base (the weight in kilograms, the volume of waste, or the capacity in liters of the waste bin). It is a bit challenging for municipalities to prepare the generally binding ordinance so that they get the revenues during the taxable period as they were used to if they choose the weight or the volume of communal waste as a tax base. The possible solutions might be advance payments or partial payments after several partial periods - calendar months.