This Week's Obsession: Will a "Sin Tax" on Fast Fashion Change Behaviour?
A French bill proposing steep penalties on fast-fashion products swiftly advanced through the legislative process, targeting environmental impact. If passed, it could impose surcharges as high as €10 per item by 2030, potentially disrupting the economic model of fast fashion brands.
Additionally, fashion companies flooding the market with rapidly changing product lines will be prohibited from advertising in France. Furthermore, companies will be obligated to disclose the environmental impact of their products at the point of sale and promote re-use and repair initiatives. The funds generated from this new system will be used to support businesses striving to enhance the industry's environmental sustainability. It certainly won't be enough to offset the damage, will it?
This bill, positioned as an eco-friendly measure to combat excessive consumption and penalise environmentally harmful products, also aims to limit the influence of disruptive foreign fast-fashion companies like Shein and safeguard French brands and manufacturing. This approach has garnered broad support in the National Assembly, especially as other climate initiatives are facing resistance for potentially harming domestic industries.
The big question is will the "sin tax" actually change consumer behaviour? Did people give up smoking cigarettes with they became more expensive due to "sin taxes"? Have people given up sugary drinks since the UK imposed a similar tax?
There’s a growing literature in behavioural economics that studies the tendency for people to under-weigh distant consequences and overweigh the upfront benefits or costs of doing something. This can explain everything from why we save less for retirement than we should or intend to, or why we exercise less than we ought to.
The impact of higher prices and taxes on cigarettes to mitigate cancer and other diseases has been discussed for years. The fact that cigarettes have seen higher costs has slowed down some people, but it hasn’t stopped people from purchasing them. In fact, in a study of ex-smokers only 3% cited economic cost as the reason why they quit.
The number one reason cited for quitting smoking was current personal health. In this case of the fast fashion "sin tax" consumers will most likely be the ones penalised for the corporations' actions as their clothes become more expensive.
The bill still has some way to go before becoming law and the fine print of how it would apply has yet to be ironed out.
The other big question it raises is what counts as fast fashion?
Shein argues that while it has an expansive and fast-moving range of products, it only produces in small batches according to demand. The result, it says, is that very little that the company makes goes unsold, making it much less wasteful than more traditional retailers.
France is in the process of finalising its own criteria to assess the environmental performance of a product.
Companies’ scores — and the likelihood their products could be subject to hefty penalties — could change dramatically depending on how many products they place on the market each year, the length of their sales cycles, the types of material used and pricing. Whether materials and products are sourced locally will also factor into the equation.
It’s a topic that has been the subject of fierce debate for years and remains contentious.
Under the French system as it currently stands, many of the world’s biggest apparel brands, including H&M, Zara and synthetic-heavy sportswear makers, would likely come off poorly. The good news would be if new business models emerge from investing the funds in more sustainable practices. In the long run we all will benefit, however, as behavioural economics show, we tend to under-weigh the long run in our current decisions.
It's no surprise that France would be the first to impose such a tax. France invented Haute Couture and Paris is arguably the symbol of elegance and luxury. Beyond Paris Region's unrivaled cultural heritage, the Fashion industry is a major contributor to France's GDP - 3.1%, more than the automotive industry - and employment with over 600,000 jobs in this industry. So therefore the advent of fast fashion actually hurts them the most, beyond the sustainability concerns.
At More Luxury Club we're focused on making luxury goods more affordable and sustainable, however, we know for many these goods will never be affordable. What we do support is the advent and adoption of circular models as a way to extend our resources and reduce waste.
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