In the News
Latte Levy - a surcharge for use of takeaway paper cups
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5th January 2018
MPs are calling for a law that would introduce a surcharge of 25p for the use of takeaway paper cups used for hot drinks purchased from coffee shops.
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The levy has been suggested as the huge consumption of the paper cups has a negative impact on the environment as they are difficult to recycle (they're constructed to be waterproof!). More information on the suggestion can be found in this article from the Guardian.
UK MPs are calling for a "latte levy" on disposable coffee cups - and a total ban unless recycling improves. What would make you switch from disposal cups? #BBCBizlivehttps://t.co/JtpDG38KtL pic.twitter.com/Ngu84t9Pk9
— BBC News (UK) (@BBCNews) January 5, 2018
Addressing negative externalities
The 'latte levy' provides a useful example for Economics students of government policies to combat a negative externality. It would seem that current self-regulating policies are ineffective - attempts by the coffee shops to either re-cycle the cups in special bins located on their premises or offering discounts to customers who provide their own cups do not seem to have attracted much uptake.
The group of MPs highlight the positive impact of the plastic bag surcharge introduced in supermarkets and shops and how that has vastly reduced their use. The argument is that people will respond more positively (i.e. reduce consumption of paper cups) to a charge rather than offering discounts. Is a latte levy an effective nudge to change behaviour?
It would be interesting to know the price elasticity of demand for takeaway coffee and how an increase in price of between 7 and 10% would impact on demand (does the 'addictive' nature of coffee make it relatively inelastic?).
MPs are also suggesting several other measures for reducing consumption that could act as alternative suggestions for students. An outright ban is proposed, as well as requiring the coffee shops to pay more towards the cost of recycling cups and a cigarette-packet style display of information on the cup warning of the dangers.
Here is a link to our resources on the economics of plastic pollution
Some responses to the debate over a latte levy!
— FT for Schools (@ft4s) January 5, 2018
Say goodbye to disposable coffee cups and dodge the #lattelevy by investing in one our our reusable coffee cups. They're dishwasher and microwave safe, so perfect for the busy household: https://t.co/OzpysN7REo pic.twitter.com/r3TtVI8vae
— RSPB (@Natures_Voice) January 5, 2018
'Disposable cups are contaminating the environment': Cafe owner welcomes 25p latte levy https://t.co/bWWxQxnVlH
— The Independent (@Independent) January 5, 2018
Taxpayers subsidise takeaway coffee drinkers because plastic coated cups are not easy to recycle and go to landfills. Will the British levy a 25p (34 cents) tax on coffee drinkers? The BBC hears from Trewin Restorick @hubbuborg. Listen at: https://t.co/ub50duU0os pic.twitter.com/uX7BaqrVsQ
— BBC World Business (@BBCWorldBiz) January 5, 2018
Lots of you have had something to say about Mike's view this morning... #lattelevy ♻️ pic.twitter.com/PKyrouhgZ9
— BBC Radio 5 Live (@bbc5live) January 5, 2018
"The UK has woken up and smelled the coffee cup nightmare". Find out what Hugh has to say about the proposed #LatteLevy https://t.co/D0J19qHJ9T pic.twitter.com/3zlSy7dXQ4
— River Cottage (@rivercottage) January 5, 2018
Editorial: A latte levy is the right way to change our use of plastics https://t.co/tyPclNaymM
— The Independent (@Independent) January 5, 2018
Study resources on the Tutor2u website
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