Analysing the Plastic Packaging Tax

21 Nov 2019

The government is set to introduce its new 'Plastic Packaging Tax' in 2022. Our blog post analyses the new tax, and considers its potential effects on certain businesses and individuals.

The government is aiming to encourage the responsible use of plastic amongst UK manufacturers. According to the government, the 'world-leading' new Plastic Packaging Tax would affect the production and importation of plastic packaging with less than 30% recycled content. Plastic packaging accounts for 44% of all plastic used in the UK, 67% of plastic waste and over two million tonnes of plastic packaging.

Outlining the tax

Introduced in the 2018 Spring Statement, the Plastic Packaging Tax will affect plastic packaging with less than 30% recycled material. A March 2018 consultation on the tax received 162,000 responses – a record number. Subsequently, the government consulted on the design of the Plastic Packaging Tax, and how best to implement it without causing extensive administrative disruption.

According to the government, using recycled plastic is often more expensive than using new plastic, despite it being more environmentally friendly. The government stated that the Plastic Packaging Tax will be set at a rate that provides a 'clear economic incentive' for firms to use recycled material in the production of their plastic packaging. It hopes that this will create greater demand for such material, and 'stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration'.

How will the tax affect businesses?

Small firms recently warned the government that the new Plastic Packaging Tax could place additional burdens on them, at a time of significant economic uncertainty. According to small businesses, these burdens would require extra funding. The tax may also result in increased costs for firms, which could potentially be passed on to consumers.

Additionally, some consultation respondents suggested that the Plastic Packaging Tax could affect older people or individuals with disabilities, as manufacturers could be required to change the materials used in current packaging to those which are harder to open. The tax could affect the ease of opening medicine such as blister packs, for example.

Businesses have until April 2022 to adapt their processes before the introduction of the Plastic Packaging Tax. The government believes that this will give firms time to adjust their behaviour and help them minimise any additional costs they may face.

The government intends to outline its next steps in regard to the Plastic Packaging Tax at the next Budget.

The new Plastic Packaging Tax will undeniably affect UK businesses in many different ways. Firms are advised to plan ahead of the tax's introduction in order to mitigate any costs they might face.

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