9th Jul 2021
Over the past 10 years there has been a huge shift in consumer perception around products, materials, packaging and services that they purchase. In 2019 the Guardian released a research study which stated that 8 in 10 consumers are trying to reduce their plastic waste and 50% would be willing to pay higher prices for eco-friendly packaging leading to a more conscious consumer*.
Plastic packaging has quickly become of significant interest to the government as consumers interest increases. In response, as from April 2022 the government is introducing a plastic packaging tax whereby any product that doesn’t contain at least 30% recycled content will be taxed £200 per tonne. The EU has also released a similar levy will is due to start as soon as July 2021. This levy requires all EU member states to pay €800 per tonne of plastic packaging placed on the market that is not recyclable/recycled plus member states will also have their country specific regulations.
But what does this tax mean for UK businesses and how will it satisfy consumers demand for less waste? On Thursday 15th April, Anthony Brimelow, Commercial Director at Duo UK hosted a webinar with Martin Hyde, Policy Leader at Comply Direct to explain the upcoming taxes, how to take action, as well as answering the pressing questions. Here we summarise the key points from the webinar and how this helps meet the demands of the more conscious consumer.
Justification for the UK Plastics Tax
The plastics tax existence is to encourage the use of recycled material and minimise the usage of virgin material in packaging. In turn this would help increase the reliance on recycled plastics, the demand, but overall increase the secondary market capacity, leading to more investment into the recycling infrastructure, material collections and recycling facilities. But the UK tax is not ring-fenced. Any tax charges will be diverted into the central treasury rather than set aside for recycling or recycling investment purposes.
The UK plastics tax is being reviewed by the treasury and is being treated as a tax rather than a compliance issue. Plastic taxation is not always linked to or aimed at the environmental measures, sometimes the revenue data factor is as much of an encouragement.
Justification for the EU Plastic Levy
EU plastic levy effectively is a similar tax but isn’t a direct tax on businesses, this is a levy aimed at individual members of state government. It is not a tax but a charge on the material. This tax has been implemented as part of the EU COVID recovery plan to create a specific revenue generation method.
In terms of financial value, the levy is expected to generate £42 billion between 2021-2027 making up to a 4% total EU budget in that time period.
The two EU countries that have made the most progress in terms are Italy & Spain.
Italy’s taxation is planned to be enforced from in July 2021 charging a €450 per tonne which is applicable to all businesses placing virgin plastic packaging on the market. At this point the Italian government haven’t provided any clarification on the level of percentage recycled content they require for an a packaging product to be exempt from their tax. They have stated that the taxation is not applicable for products containing biodegradable or compostable plastics.
Spain planned to enforce their taxation from July 2021 at a charge of €450 per tonne which is applicable to any non-reusable plastic packaging placed on the Spanish market. The companies liable for the taxation are manufacturers of packaging sourced in Spain and importers of packaging which is manufactured outside of Spain. Currently, it is unclear on whether there will be recycled content relief.
Evolving packaging for the conscious consumer
To align with consumer behaviour and prepare for the taxations we suggest 3 immediate actions to take:
If you want to know more about the upcoming plastics taxes head over to blog here