President Biden’s recently enacted Infrastructure Investment and Jobs Act is a bipartisan achievement that deserves more attention: the resurgence of Superfund excise taxes on dozens of chemicals and hazardous substances.
The original Superfund tax – used to fund hazardous waste site cleanup including landfills and abandoned factories – expired in 1995. Since then, Superfund cleanup has slowed considerably due to an inconsistent patchwork of funding, but the new Superfund taxes are expected to pump $14.5 billion into the program over 10 years.
It took lawmakers a long 25 years to reach this point, and from an environmental justice perspective, the impact of the revived taxes could be transformative.
Roughly one in five Americans 3 miles. lives within of a Superfund hazardous waste site, and for Americans of color, the number is even higher: more than 20% of black Americans and nearly 30% of Hispanic Americans, According to white House.
The Biden administration is prioritizing cleanup in those communities, and about 60% of Superfund sites receiving funding under the new law are in historically under-served communities, According to Environmental Protection Agency administrator Michael Regan.
basic superfund tax targeted Three areas: petroleum excise duties, chemical feedstock excise taxes, and environmental income taxes. The reinstated taxes focus on chemicals and dangerous imported substances and will have much higher rates for a newly expanded group of taxable substances.
First, the Infrastructure Investment and Jobs Act reinstates and doubles the chemical excise duty under IRC section 4661. The tax targets 42 specific chemicals, including propylene, ammonia and mercury.
Under the tax, any manufacturer, producer, or importer of those chemicals must pay a tax of $0.48 to $9.47 per ton, depending on the hazard posed by the chemicals.
The hazardous substances excise tax has also been reinstated in IRC Section 4671, and the US Treasury Department will publish a list of taxable substances by January 1, 2022. The tax rates that apply to hazardous substances entering the United States for consumption use them. , or storage, will be doubled.
A third tax provision has also been doubled. Under the old Superfund tax regime, importers who failed to send sufficient information about their dangerous cargo to the Treasury for tax calculation purposes were taxed at 5%. The Infrastructure Investment and Jobs Act raises that rate to 10%.
Importantly, the law significantly expands the range of taxable substances. Under the old regime, excise duty is applicable to any substance that comprises at least 50% of the taxable chemical. The limit under IRC section 4672(a)(2)(b) has been reduced to 20%.
Compared to its counterparts in the OECD, the United States charges one of lowest level of environmental taxes, so the reinstatement of Superfund taxes is a welcome development.
From here, lawmakers can explore many more ideas to boost the country’s environmental tax revenue, such as pay polluters for their prior emissions.
The speed is there. Congress just has to keep it going.