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How would you solve that problem?
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Local areas would need to identify who was commiting the crime and punish them suitably.
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Those that do pay for their rubbish to be picked up by private companies are going to be charged a lot more than they are charged now
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I would say the opposite. Just because you don't have the government forcing you to use it, doesn't mean a lot of people wouldn't choose to get together or even trust their local government to make arrangements. People would be much more aware of their responsibilites and the consequences for harming others.
There would be less political skulldagary with contracts and with zero tax, many more companies able to set up and compete.