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4.37 In residential areas, municipalities should attempt to recover all or a portion of their solid waste costs through mandatory user charges or benefit taxes. In establishing an equitable basis for setting charges, the municipality has two general options. One alternative is to charge a mandatory fixed user charge based on one or more measures of service level, i.e., number of waste containers, frequency of collection, distance from containers to collection vehicles, and type and quantity of waste. This scheme would be applied to homogeneous neighborhoods; higher income neighborhoods would be charged a fixed fee for a higher service level than lower income neighborhoods, which would receive a lower level of service for a lower price. In low--ncome areas, the municipality should provide a basic level of service that is adapted to local needs and traditions and allows for some degree of payment, either in cash or in kind. The remainder of the costs for collection in these areas can be subsidized by local revenues. In some cases, user charges from commercial and industrial enterprises that pay for high quality individualized service can be set high enough to allow a municipality to extend service to low-income areas.

4.38 Where neighborhoods are not homogeneous, users can be charged variable fees based on one or more measures of household income (e.g., number of rooms, floor space of buildings, and property values). In establishing the rate structure based on income, however, project designers will need to consider the reliability, availability, and accessibility of property data. Where there are inadequate data, as is the case in most developing countries, the charge for solid waste collection should be based largely on service level.

4.39 As an alternative to charging benefit taxes to recover solid waste collection costs, municipalities or private solid waste services can collect residential user charges only from those willing to pay. Where there is a perceived need to have garbage removed and a consequent fine if the refuse remains on or near the property, residents can be expected to pay for the collection service or haul their wastes to designated transfer/disposal sites. The generation of significant revenues from these beneficiaries, however, will be largely dependent on the system's capacity to provide a high level of service and to enforce anti-dumping regulations. In some cases, it may be possible to collect user charges only from those willing to pay for high quality individualized service; the costs of providing a basic level of service in other areas could be financed by local revenues. Where there is an inelastic demand for solid waste services, user charges for high quality services can be set high enough to subsidize collection services in other parts of the city. Although the collection of voluntary user charges has-proven effective in many cities in the United States, there is limited experience in developing countries. A few examples in Guatamala and Mexico shows that there is a problem of illegal dumping by those who choose not to pay or cart their wastes to municipal disposal sites.

4.40 Although project designers should attempt to recover the recurring costs of solid waste collection to the maximum extent possible, there will be situations where the application of user charges will not be feasible. In these situations, municipalities will need to continue to pay for solid waste collection entirely out of local taxes. Normally, the cost will be recovered through the property tax.