The Effect of Industrial Waste Taxes: A Panel Data Analysis of Final Disposal of Industrial Waste in Japan

Abstract

This paper analyzes the effect of industrial waste taxes on final disposal or landfill using panel data. It also analyzes the effects of economic activities on final disposal. The main results are as follows. First, industrial waste taxes in Japan have so far produced hardly any significant reduction of final disposal. For taxation of the type enforced in Mie Prefecture and Shiga Prefecture, although results that exclude waste from outside the prefecture show a decrease in the amount of waste disposed of in landfills in the fiscal year prior to taxation, and in the second and third years after the introduction of taxation, after that the amount increased again. On the other hand, for results that include waste from outside the prefecture, not even the reduction at the beginning of taxation is observed. This implies that the announcement effect of taxation was not effective for generators of waste outside the prefecture although it was observed by generators inside the prefecture. For other types of taxation, the taxation did not significantly affect the amount of waste disposed of in landfills, regardless of whether waste from outside the prefecture is included or not. Second, while the output by agriculture and construction sectors is significantly positively correlated, the output by ceramic and quarrying sectors is significantly negatively correlated. This means that the amount of waste disposed of in landfills decreases as the output of ceramic industry and quarrying increases. This seems to be due to recycling in the process of making cement. Finally, this paper examines the reasons why industrial waste taxes in Japan have hardly produced any significant effects on the reduction of final disposal.