Sales tax is pushing for a green transition
Green transition: Clothing production accounts for 10 percent of the world's total CO2 emissions. That's more than airplanes and shipping combined. Secondhand is an important part of the solution and the responsibility lies with both businesses, consumers and politicians. A good place to start would be to abolish the VAT on second-hand goods.
By Jesper Svarer, former advisor to Morten Messerschmidt and founder of Grade A Copenhagen.
We Danes consume clothes like no other. Our clothing consumption is 35 percent higher than the rest of the world's population. A sad world record considering that the production of clothing accounts for around 10 percent of the world's total CO2 emissions.
We therefore need to change our consumption habits; buy less new clothes, buy better quality clothes that last longer and last but not least, we need to choose more secondhand. Something that, despite the urgency of the climate crisis, we are far too bad at. 64 percent of Danes do not even consider secondhand when shopping for clothes.
Smells of dead bodies
In my opinion, there are several reasons why many Danes choose not to buy second-hand clothes when they need to renew their wardrobe. Firstly, there are an incredible number of prejudices surrounding second-hand clothes. And when you, like me, grew up in the provinces, where second-hand shops are mostly associated with an indefinable smell of dead bodies and wildebeest, and where second-hand gold is far from the norm, you really understand this.
As a great fashion enthusiast and not least a secondhand advocate, I am annoyed on behalf of both the climate and consumers that no one has yet succeeded in unleashing the huge potential that secondhand, in my opinion, possesses. That is why I recently chose to exchange my life as a political advisor to Morten Messerschmidt for a life as an entrepreneur and founder of Grade A Copenhagen. Here I have created a universe whose ambition is not so much to compete with other secondhand stores, but to a much greater extent to be a truly competitive alternative to classic clothing stores.
But no matter what I and other business people do to break down existing barriers, political action is also needed if consumers are to increasingly replace new clothes with used ones.
There is no shortage of creativity when it comes to regulating the behavior of Danes and the country's companies through the use of various climate taxes. And taxes are certainly a relevant part of the toolbox. But if you stand with a hammer in your hand, as you know, you only see nails. Maybe it was also time for the state to look at its own behavior?
Carrots are preferable to sticks. Therefore, it is not surprising that Concito's Climate Barometer shows that many Danes are skeptical when climate measures move closer to everyday life and consumption patterns.
Away with VAT
In March, an analysis conducted by Danske Erhverv showed that it is especially the expectation of a good price that tempts consumers to buy second-hand goods. If more Danes are to change their consumption habits so that more second-hand goods are included in their shopping basket, economic incentives are therefore obvious. And here I am very surprised that the state, as it is today, imposes a tax on circular companies for the resale of second-hand goods, the so-called second-hand VAT scheme.
Second-hand shops almost never buy goods with VAT on them, which makes it difficult to do business on normal terms with purchase and sales VAT. These companies therefore have the opportunity to use the second-hand VAT scheme, where VAT is paid on the profit instead. But why not simply exempt circular business models from this tax? Firstly, VAT has been paid on the product once, and secondly, the second-hand VAT represents a presumably low revenue for the treasury.
I have therefore also just submitted a citizens' proposal to abolish the VAT on used goods. No one can doubt that circular business models are a significant contribution to the green transition.
It can therefore only be too slow to create a better framework for these companies.
