Proposed Landfill Fee Really a Tax

The Michigan Legislature is considering a new fee on landfill trash to curtail Canadian waste disposal in Michigan. But the proposal is both flawed policy and unconstitutional. From an environmental perspective, such a hefty hike in disposal fees, because it would make waste disposal more expensive, would increase littering and illegal dumping.

Senate Bill 721, introduced last September by Sen. Liz Brater, D-Ann Arbor, would impose a new $3 charge per ton of solid waste deposited in Michigan landfills. Most of the proceeds would be distributed to counties to encourage recycling.

In reality, the recycling component of the proposal is just an excuse to impose the fee. Proponents are far more interested in eliminating trash imports from Ontario by making disposal in Michigan too costly. But what becomes more costly for Canadians also becomes more costly for Michigan citizens.

At a time when the Michigan economy is lagging behind the rest of the country, our lawmakers should not be increasing costs on businesses and consumers. And to the extent that the higher fees reduce trash transports, communities that host a waste facility would be hard hit. Sumpter Township, for example, derives some 40 percent of its budget revenue from the trash trade of Carleton Farms landfill.

The $50 million or so the fee would generate annually could be put to much better use than further subsidizing unsuccessful government recycling programs.

Moreover, the new fee would have little effect on a substantial portion of trash imports because many landfill contracts include clauses that prohibit increased fees from being passed on to customers.

The economic factors driving trash imports here likewise influence the flow of Michigan waste. According to recent statistics compiled by the state Department of Environmental Quality, Oakland County exported 40 percent of its solid waste disposed of in-state in fiscal year 2001 to landfills in Macomb, Monroe, Washtenaw and Wayne counties — including the same facility that receives Canadian trash. Michigan is also among the 49 states that export garbage, including 53,000 tons of hazardous waste sent to Canada in 2001.

Beyond the policy flaws, the so-called fee may actually be illegal. The Michigan Supreme Court provided a clear judicial test in determining what is a fee and what is a tax (Bolt v. Lansing, 1998). The court established three criteria: 1) A fee serves a regulatory purpose rather than a revenue raising purpose; 2) User fees must be proportionate to the necessary cost of the service; 3) The fee must be voluntary.

The proposed solid waste surcharge fails on all three counts.

Generating funds to promote voluntary recycling is not a regulatory purpose. Nor is there any nexus between the money raised and the services rendered. Moreover, the surcharge can hardly be considered voluntary. Business and consumers do not have a reasonable option but to dispose of their trash.

Thus it is clear that the proposed "fee" is actually a tax, which requires either a vote of the people or tax legislation.

There is no evidence that landfills pose a greater risk than a host of other environmental hazards. Notes economist Daniel K. Benjamin, a senior associate of the Political Economy Research Center, "[E]ven the Environmental Protection Agency acknowledges that the potential threat to air and water quality posed by modern landfills is essentially nonexistent."

These are challenging times for Michigan, both economically and environmentally. To attempt to restrict trash imports, which help to maintain sanitary and affordable landfill capacity, would divert limited resources from far more urgent matters.

Russ Harding is senior environmental policy analyst for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich.