California VARs hit with recycling fee

After a two-year delay, a US State of California law requiring resellers to collect US$6 to US$8 on every monitor or laptop sold in the state will take effect 1 January, causing an outcry about administrative burdens and increased costs for the channel.

The Electronic Waste Recycling Act of 2003 requires retailers to collect a US$6 fee from their customers for each CRT or LCD sold that is smaller than 15 inches and a US$8 fee for displays 15 inches to 35 inches. The recycling fee for displays larger than 35 inches is US$10. The fees will help offset the state's costs to recycle discarded displays.

"It's a pain," said Chris Ferry, executive vice-president of Technology Integration Group, a California reseller. "We've got a whole new line item that we have to put on every sale of every monitor, laptop or LCD we sell in the state. It applies to retailers, mail-order companies and manufacturers selling direct. I don't see any loopholes."

The recycling act was first passed in 2003, but the Electronic Waste Recycling Fee provision of the act doesn't go into effect until Jan. 1, 2005.

According to the California State Board of Equalisation, the fee applies to monitors that are leased or sold. "The general rule under California's Revenue and Taxation Law has long been that a lease is a continuing sale and purchase," according to a California state government website.

Resellers, retailers and vendors that sold monitors to end users would collect the fees from consumers, then remit the money to the Board of Equalisation. Resellers can retain three percent of the fees collected as reimbursement for costs incurred while collecting the fees, the website stated.

Some California solution providers were not aware of the new law until informed by CRN. "You've just ruined my day," said Varoujan Baltayan, senior account executive at CorpInfo Services, a solution provider in Los Angeles. "The cheapest solution to this is to not sell the monitor with the system."

He added that the three percent fee reimbursement was no consolation. "It will take 300 percent of the fee to administer the program," Baltayan said.

Ferry said customers will ultimately pay the price for California's recycling law. "We are all going to have to pass this [cost] through some way or another," he said.