• Assessment underway to decide which part of the production process should be taxed 

The Central Environmental Authority (CEA) has requested the Finance Ministry to explore the possibility of imposing a levy on polythene bags to fund environmental conservation projects. Faced with complexities in applying the levy without causing unnecessary price hikes on other polythene products, the CEA is assessing which stage of production should be taxed.

Speaking to The Daily Morning, the CEA Director General Kapila Rajapaksha clarified misconceptions regarding the polythene bags controversy. He explained that a past court case - in which the regulations that made giving a polythene bag to the customer free of charge mandatory, was lifted - supported by the Centre for Environmental Justice (CEJ), ruled against free polythene bags at shops and ordered a price to be set - not a levy. “There is a miscommunicated idea in society that the court imposed a levy and the CEA has not acted responsibly to collect it for conservation funds. However, no such levy was ordered; only a price was to be declared,” he stated.

However, he noted that to raise money for environmental projects, such as promoting plastic alternatives, the CEA has requested the said Ministry to impose a tax on polythene. “But, the process is complicated, as it remains undecided at which production stage taxation should occur. While imported plastics already face a CESS tax, taxing local polythene producers could cover a fair amount, many bag producers operate unregistered, making it difficult to include them in taxation,” he said.

Additionally, the CEA is analysing the possibility of imposing a levy on virgin plastic pellets. Rajapaksha cautioned however that low-density polyethylene is used for more than just bags, so a tax could raise prices on many other products. “It’s only after an analysis of the situation that we are able to give a  solution for this issue,” he added.

His clarification follows the CEJ urging the Government to address a regulatory gap allowing companies to profit from charging for plastic bags without allocating revenue to conservation. The CEJ has stated that its original legal action aimed to reduce polythene waste, especially from supermarkets and to ensure that funds from consumers would support waste management, public awareness, and eco-friendly alternatives; yet now, it is facilitating the supermarkets to profit more.