I would envision it as a money that don't go to the general pile of tax-raised money which becomes the country's government budget, but be kept separate and be used for investments in recycling and environemtn protection. I am not a lawyer and have no idea if this is a thing anywhere, but it seems so logical. You raise money off an ecological problem and use them, directly, to solve the ecological problem (and others).
It just will not work, countries are not interested in keeping the planet clean from plastic and from greenhouse gas. It must be on international level.
Why is it terrible? The OP said to burn what you can for electricity, so that really should just leave metals. Copper is valuable, so hopefully they'd strip all the wiring and recycle it, leaving just steel and maybe aluminum (which itself is valuable for recycling too). How is dumping steel car frames in the ocean "terrible"? These days, entire ships are sunk (after getting all the fluids out of them) to actually help the ocean wildlife as artificial reefs.
However, I do agree there should be a lot more effort to recycle this stuff.
Burning plastic/paper/other packaging gets you a lot of toxic stuff in the atmosphere. I know there are filters and processes and whatnot, but it just feels wrong and smelly.
Aluminium recycling actually works great, recycled aluminium is 95% less energy expensive and some 75% of aluminium comes from recycling. (1)
Steel could also be recycled like that, I guess ships are a lot more difficult to cut apart and melt down than cars, because they are heavier and larger (citation needed). At any rate, we put a lot of resources and energy into the steel for cars, maybe we should use that steel as much as possible instead of putting more energy into more steel.
I see now. I misunderstood: I thought you were saying that dumping the remaining steel shells in the ocean was terrible for the ocean. Yeah, burning all that stuff is terrible.
Sort it, burn what you can for electricity, dump rest into deep ocean.