Variable waste charging powers will be given to local authorities if the Liberal Democrats win the next general election.
Householders would also be able to get refunds if they reduced the waste they produced.
At its annual conference
in Bournemouth, the political party launched a series of policies designed to provide economic incentives for people to be more environmentally friendly.
Norman Baker, Liberal Democrat shadow environment secretary, said: The simple message is that polluters must pay. But that doesnt mean more tax for everyone. It means a tax system that will financially reward those who use environmental factors in their decision-making.
The party also criticised the way the Government was implementing the Landfill Directive. It said that due to Department for Environment, Food and Rural Affairs (DEFRA) incompetence, there would be 3 million tonnes of hazardous waste with nowhere to go because of a lack of process capacity in the UK.
Sue Doughty, shadow environment minister, said: The hazardous waste crisis we are facing is this country is the direct result of serious incompetence by DEFRA. It is scandalous that the Government had five years to prepare for the new rules under the Landfill Directive, but failed to make sure there were specialist facilities ready in time.