In the course of the debate, Mr Gammanpila claimed that e waste could not be transported across borders and that therefore the levy was needed to fund the construction of a factory. I questioned the veracity of this claim and even challenged him to a public debate. See the summary and my continuing efforts to engage the issue here. And who will be held to account for the wasteful expenditures, if any, on the e-waste processing factory?

Today, it was reported that the CEA that Mr Gammanpila headed had been instrumental in the export of 27,000 tons of e-waste, including mobile phones, for proper processing. This suggests the CEA has proved me right with regard to the interpretation of Basel.

The CEA in Sri Lanka wanted to use the enviLevy on mobiles use (an illogical eco tax if there was one) to build a factory to process e waste in Sri Lanka. I said there was not enough volume to justify such a facility and that we should export our e waste. But the government wanted the factory, for whatever reason.

In my new approach, which is to give constructive advice on whatever the government of Sri Lanka wants to do within the limits of reason, I had been thinking about how the CEA could still get a viable factory. One solution was to import e waste get the required volumes for their dream factory. Unfortunately, that option seems to be closing thanks to US do-gooders who think we can’t follow rules. Maybe this is something the JHU (Mr Gammanpila’s political party) can take up?

Some 53 million tons of electronic waste was generated worldwide in 2009, according to ABI Research, a technology market research firm. Only about 13 percent of it was recycled. Global revenues for e-waste recovery were roughly $5.7 billion last year, according to ABI, and are expected to grow to $14.6 billion by 2014.

Since January, Washington State residents and small businesses have been allowed to drop off their televisions, computers and computer monitors free of charge to one of 200 collection points around the state. They have responded by dumping more than 15 million pounds of electronic waste, according to state collection data. If disposal continues at this rate, it will amount to more than five pounds for every man, woman and child per year.

In Sri Lanka, the Environment Ministry is collecting massive amounts of money from mobile usage, in the name of recycling mobile phones. There are more TV sets in the country than mobiles and they are bigger and therefore constitute a greater threat. What is the Ministry doing with our money?

Full story.

Multiple dishes is a common sight at many Nenasalas – the ‘telecentres’ set up under the e-Sri Lanka program, funded by the World Bank. Some of them are huge – with diameters little less than 2m. Having not done a design recently, I cannot tell the prices offhand, but I do know they are expensive – one such dish (with equipment) costs few times more than the aggregate cost of the PCs and peripherals in the centre.

Why a telecenter is equipped with multiple dishes?

The reason is, sadly, poor planning. ICTA, the implementation agency changes the communication services provider frequently. Few years have elapsed since the services from the initial provider have been discontinued, but he has never bothered to remove the dishes. Why? Your guess is as good as mine. The capital expenditure has been fully included within the Rs. 90 million (US$ 900,000) amount charged to provide VSAT services to then 200 odd Nenasalas for a period of one year.

The sadder part is even with such a substantial expense these centres are not provided broadband. What they receive is 128 kbps – something not too different from dial-up.

That is when some of these centers are already within the 3G coverage areas. Out of the three above two centers receive 3G signals. Not too great, but adequate for a telecenter and certainly better than a 128 kbps link.

We will be glad to learn what Udaya Gammanpila, ex-Chairman Central Environmental Authority, (who was once worried about used mobile phones creating an e-waste issue) thinks about the environmental damage created by these non-functional dishes, even if we ignore the huge sunk cost.

Supreme Court today (Nov 01, 2008) ordered the suspension of three environmental levies imposed recently, reported Lanka Dissent.

Accordingly, the levies imposed on telecommunication towers, CFC bulbs of more than 40 Watts as well as the levy imposed on vehicles in the Western Province were directed to be suspended.

Should we open a bottle of Champaign? May be not. It was not LIRNEasia that took Environment Ministry to courts. Still we take pride in fighting against these irrational environmental levies which would have served nobody.

Some of our earlier blog posts:

Small Victory for LIRNEasia: Sri Lanka’s Supreme Court issues Interim Order against Tax on Mobile Phones and Telecom Towers (Sept 23, 2008)

Digital cigarettes (Sept 21, 2008)

Sri Lanka: Udaya Gammanpila says Environmental Levy does not burden public (Aug 19, 2008)

Sri Lanka: Road to ‘Dharma Rajya’ does not look ‘toll-free’ (Aug 14, 2008)

Sri Lanka: Taxing poor to clear the e-waste of rich (Aug 03, 2008)

Is mobile phone a polluter? (April 10, 2008)

“Green” tax to be imposed on mobiles? (Oct 30, 2007)

By the way, please note the 2% envy tax on mobile usage is still not off. So the battle is only half won.

If any reader wishes to offer their deepest condolences to Udaya Gammanpila, Chairman, Central Environmental Authority and Champika Ranawaka, Minister of Environment, about their failed attempts to irrationally burden a selected group of consumers to cover the recurring costs of Ministry of Environment, please feel free to use space below for the same. Guaranteed reading by both gentlemen. After all, LIRNEasia still comes within first ten Google hits for their names.

Considering five fundamental rights applications yesterday (Sept 22), the Supreme Court issued an interim order against the implementation of the Environment Tax, reported Lanka Dissent. The petitioners were Ven. Maduluwawe Sobhitha Thera, Ven. Kiniyawala Palitha Thera, Telshan Network and Swarnavahini.

The SC ordered the immediate suspension of the gazette notification announcing the new tax, and fixed December 01st as the next day of hearing.

A party that opposed not the idea of Environment tax, but the manner it was irrationally applied on mobile usage (not ownership) LIRNEasia takes pride in presenting some of its previous blog posts on the subject below.

Oct 30, 2007: “Green” tax to be imposed on mobiles?

April 10, 2008: Is mobile phone a polluter?

Aug 03, 2008: Taxing poor to clear the e-waste of rich

Aug 14, 2008: Road to ‘Dharma Rajya’ does not look ‘toll-free’

Aug 19, 2008: Udaya Gammanpila says Environmental Levy does not burden public

Sept 21, 2008: Digital cigarettes

Responding to Rohan Samarajiva’s views on newly implemented Environmental levy in Lankadeepa last week, Central Environmental Authority Chairman Udaya Gammanpila calls it essential and the ‘first progressive tax’ in Sri Lanka. Assuring it does not burden public, he says any tax can be initially unpopular but the impact should be seen in long term. (Lankadeepa, August 19, 2008)

These are his points in brief:

1. If not for the Environmental levy, the government has to find money to address environmental issues by increasing either VAT or customs charges. That will raise prices in general. It is unfair. Why should villagers who have never seen a mobile phone contribute for its removal whenever they buy flour to make rotis? Instead we have introduced a tax only on pollutants. So only the culprits pay for remedial measures.

2. Mobile phone usage has drastically increased during the last few years. Now there are about 8 million mobile phones in Sri Lanka. (sic) The cost of a mobile phone was reduced from Rs. 75,000 in 1994 to Rs. 3,500. These have made the lifetime of a mobile phone shorter and more mobile phones are being released to the environment. (sic) Our intention is to build a recycling plant for e-waste. Such plants can be seen in India and Singapore.

3. Why we tax mobile usage? Because it is one commodity the prices have fallen during the last 15 years. In 1994 an incoming call was charged at Rs. 20 and outgoing at Rs. 30 per minute. Today incoming is free while outgoing is Rs. 4-5 per minute. How can one allege us insensitive to Cost of Living?

4. Before complaining about these taxes one should note their actual impact. 90% of Sri Lankan mobile subscribers are pre-paid. The average revenue per unit of a prepaid account is Rs. 360. Let us assume it to be Rs. 500. Two percent of that is Rs. 10 per month. That is all we ask to protect environment. Is this adequate even for a cup of tea?

5. Atmospheric pollution in Sri Lanka is too high. The tax on motor vehicles is meant to control this. Vehicles are taxed only if they pollute. If they run on electricity or water (sic) no levy is applicable. The levy is proportionate to the level of pollution. Vehicles such as buses, lorries and three-wheelers are exempted on Cost of Living considerations.

6. CFL bulbs solve one environmental problem, but their release to environment causes another. So we need to collect the used CFL batteries for recycling. A Denmark company has agreed to setup a recycling plant if we ensure enough input. We believe taxing 3% on non-CFL bulbs will make CFL bulbs more popular.

7. Tower tax is meant to encourage telecom operators to share towers. That has no effect on Cost of Living.

8. The money collected will be credited to a special environmental fund. Ministers of Finance and Environment have to annually report on this to the parliament. This ensures tax money will be used solely for environmental protection purposes.

(We open the discussion to our readers.)

Such wise words were not always heeded.

Four new levies, reported Financial Times today, will come into force this month under the Environmental Conservation Levy Act No. 8 of 2008.

All communication towers will be charged Rs 50,000, according to the Central Environmental Authority (CEA) Chairman Udaya Gammanpila, who explained it was done to ‘induce telecommunication companies to share the towers’.

Sharing telecom towers is good, but if Mr. Chairman thinks that happens just by forcing them to pay for erecting towers, he is wrong. Had cost been the issue, sharing would have already happened, given the high cost of tower erection – from leasing the land to bribing authorities of all levels. Further if the CEA’s concern was reducing the numbers it could have been done more effectively working together with Telecommunication Regulatory Authority of Sri Lanka (TRCSL). That is how it happens in other countries. They could have learnt from the recent attempts by Bangladesh Telecommunication Regulatory commission.

Perhaps TRCSL is too busy with monitoring porn. So this will levy be eventually paid by the mobile and CDMA subscribers.

If that is not enough, mobile phones will further be levied two percent of their monthly bills. (Even without this mobile users pay 26 cents as tax for every Rs. 1 usage – the ratio among the highest in the world) The funds such generated will supposedly be used to build an e-waste recycling plant. Says CEA Chairman: “Currently we do not have such a facility and users dispose of their old mobile phones improperly, causing damage to the environment.”

We anticipate CEA Chairman to be better informed than we are in environmental matters. All we know is used mobile phones are not an environmental concern in Sri Lanka. Recycling firms confirm it is only rarely they find a mobile phone discarded. When Dialog Telekom initiated an island-wide drive to collect used mobiles (with attractive cash prices) they could not gather even a hundred.

So we can only assume if at all another recycle plant is needed, it is for the other forms of e-waste. Parts of all types of electronic goods including televisions, radios, washing machines, refrigerators, air conditioners, sound systems and computers are being added to the environment in bulk. We fully agree. That is the environmental concern.

However almost all of these are luxury goods while mobile and CDMA phones are increasingly used by the poor. So why should poor pay for clearing the e-waste of the rich? Why not impose an environmental levy on all electronic goods?

May CEA Chairman please explain?

Do mobile phones pollute the environment? Sri Lanka’s Environment Minister Champika Ranawaka thinks so. That was why he wants to impose a so called ‘environment tax’ on mobiles, (in fact all phones, but the above newspaper article focuses on mobiles) at two points, when you purchase it and use it. This is on top of the rest of the tax components the mobile users already have to pay.

No information to that mobile usage is a serious threat to Sri Lanka’s environment. Whatever the little information we possess suggest the opposite. E-waste recycling companies claim the number of mobile phones added to e-waste is negligible. When Dialog Telekom initiated a well publicised effort to collect used mobile phones, they could collect not even 100 – much less than their original target of 1 million. So the bottom-line is wherever the phones end up not many are disposed to environment. 

Over-taxing mobile usage is not wise. That is what GSMA found in 2005, in its famous study in 101 countries titled ‘Tax and the Digital Divide’. These were some of the findings.

• On average, tax accounts for 24.8% of total handset costs and 45 countries (nearly half of those surveyed) impose specific import duties on handsets;
• Reducing mobile specific taxes and general consumer taxes such as VAT leads to substantial increases in mobile penetration and usage;
• Increased mobile penetration boosts economic activity. In developing countries a 10% increase in penetration leads to a 1.2% increase in the annual growth rate in GDP; and
• Taxation of mobile consumers in East Africa is almost twice the 17.4% global average, potentially limiting mobile expansion in the region and the associated benefits

We hope Minister Champika Ranawaka read the full GSM report (can be downloaded from here) and if he has not done yet, this piece by Rohan Samarajiva to LBO too: What is best for Sri Lanka’s environment: Tax or incentives?

Sri Lanka’s top celco Dialog Telekom wants to collect a million old phones and recycle them in the next two years in an initiative that will keep dangerous heavy metals from contaminating the environment, officials said.

Phone batteries for example have heavy metals such a lead, nickel and cadmium. Dialog is collecting old phones and accessories from today.

“In Sri Lanka there are about 10 million mobile phones, and mobile phones become obsolete in two to three years,” says Michael de Soyza from Dialog who heads the project.

“Though some are handed down to friends and siblings, eventually they are discarded and are disposed of through the garbage collection system.”

Starting today, at 14 Dialog offices, old phones would be collected. For every phone handed over – they need not be dialog phones – the company will contribute 25 rupees to a fund to buy toys for needy children over the Christmas season.

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