The Icelandic Government has opted not to introduce taxes on landfill and incineration at present and has instead implemented a system of recycling fees through legislation passed in 2002.
Source: UNCSD Secretariat (2010) Questionnaire for the Member States on Experiences, Success Factors, Risks and Challenges with Regard to Objective and Themes of UN Conference on Sustainable Development (UNCSD)

The underlying rationale for this decision is the position that landfill and incineration taxes may increase overall costs in the management of waste without achieving the targets of improved waste reduction, re-use, recycling and recovery in Iceland. The recycling fees are levied on the products itemised in the law in order to finance their collection, transport, recycling, recovery or disposal. The Recycling Fund of Iceland was set up in 2003 to collect and administer the recycling fees.