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The UK Plastics Packaging Tax

AS, A-Level, IB
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 16 Feb 2022

A new tax on manufacturers and importers of plastic packaging is being introduced into the UK in April 2022.

The UK Plastics Packaging Tax

From April 2022, the new UK Plastics Packaging Tax will see plastic packaging manufactured or imported into the UK which does not contain at least 30% recycled material charged a tax of £200 a tonne. The new tax is estimated to impact 20,000 manufacturers and importers of plastic packaging. The tax aims to increase the use of recycled content in packaging by 40% as well as boost plastic recycling rates.

This new tax is aimed at packaging producers, is not a tax on the 'end user' of plastic packaging.

Products included in the UK plastic packaging tax include:

  • Bottles designed for single use (even if they can be refilled and reused)
  • Ready meal trays and food pouches
  • Crisp packets and biscuit wrappers
  • Bin liners and refuse sacks and nappy sacks
  • Disposable cups including vending machine cups and plastic wine and pint glasses
  • Disposable plastic bowls and plates and gift wrapping such as ribbon and sticky tape

What are the main arguments in favour of the plastics packaging tax?

  • A tax on manufacturers who create plastic packaging such as processed food businesses means they will now have to pay for some of the external costs that plastic waste creates, and which leads to market failure
  • This will increase supply costs and help internaliseexternalities. As a result, there will be incentive to explore ways of cutting virgin plastic created in manufacturing
  • It will create an incentive to import / use products that already use recycled material (the tax can be avoided if recycled content > 30%) – this promotes sustainability
  • Demand for recycling businesses will grow – leading toincreased investment & jobs in emerging sectors such as sustainable, compostable products for food and drink
  • Revenue from a plastic packaging tax can be earmarked for socially beneficial purposes / projects

What are the main drawbacks / limitations / risks from the plastics packaging tax?

  • A tax of £200 per tonne will increase business costs and therefore reduce profits. Many manufacturers will pass on this higher cost to final consumers. Higher pricesmight then have a regressive effect on lower-income families
  • The packaging tax will lead to high compliance and enforcement costs. Businesses must collect evidence for recycled content and accurate measures of plastic packaging by weight. There are fears of high rates of tax avoidance.
  • The UK recycling industry has limited supply-side capacity – so the shift towards recycling and away from landfill / incineration might be relatively small
  • And even if more material is recyclable – will end userschange their behaviour? Waste collection facilities need to be expanded greatly throughout the economy.
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