Plastic packaging tax consultation launched

He re-iterated in his speech the Government’s intention to introduce a Plastic Packaging Tax by the end of 2022. Once his speech was finished, HM Revenue and Customs launched a public consultation on the detail of the tax.

The consultation builds on a call for evidence launched in 2018 and looks specifically at some of the issues highlighted by respondents to a previous public consultation run in 2019. The deadline for responses to the new consultation is 20 May 2020.

Here are the main facts you need to know:

Exclusions for imports

In a previous proposal, Treasury had proposed to exclude imported filled packaging for the tax. The rationale given was that it was too difficult to monitor recycled content used in production overseas.

This led Ecosurety and others in industry to highlight the prospect of packaging production being offshored, in order to avoid paying the tax. The new proposal now included imported filled packaging, effectively meaning all packaging will be liable for the tax unless proof of recycled content is provided.

Tax rate

Research carried out by Imperial College London suggested that the tax rate would need to be £150 per tonne to be effective in current market conditions where secondary material is approximately £500 per tonne more expensive than the virgin equivalent. The consultation proposes a flat tax rate of £200 per tonne on all packaging containing less than 30% recycled content.

The Green Alliance have recently criticised the flat tax in a report, suggesting that the tax’s effectiveness will depend on market conditions. Alternative options, such as a “stabilisation fund” or “contracts for difference” were suggested.

Exemptions

The Government are proposing a narrow exemption from the tax for medicine packaging. The challenge of including recycled content in a safe way in order to pass strict testing requirements is outlined as a challenge. However, it does not appear that other medical products or food contact packaging will be exempt from the tax.

A lot of work to be done

We’re pleased to see that the Government is again consulting on the plastic packaging tax. There is a lot of work to be done before it is ready to be launched in 2022. At first glance, it looks like HM Treasury have got a handle on the key failings of their previous proposal.

We’re glad to see they have recognised our, and any others’ point, that excluding imported filled packaging from the tax could have led to packaging production being offshored. We look forward to digging into the detail in the coming months.

If you have any concerns or questions about the plastic packaging tax, please contact our team.

Plastic Packaging Tax presentation - watch now

On 1 April I recorded a presentation that walks through the main points of the Plastic Packaging Tax and the consultation, including poll results from our members and industry stakeholders on key questions. You can watch it now by clicking here. 

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