UK – The UK Government has proposed a reform of the Plastic Packaging Tax, which was introduced in April 2022, arguing that changes to the scheme could help raise funding to scale chemical recycling innovations.
The tax applies at a rate of £200 (US$251.79) per tonne to plastic packaging with less than 30% recycled content, covering imported packaging and that manufactured in the UK.
The Department for Business and Trade and the Treasury have outlined changes to the UK’s tax system, including reforming the Plastic Packaging Tax to support chemical recycling innovations.
The proposed reform will use a ‘mass balance’ approach to calculate the percentage of chemically recycled content included in plastic packaging, which verifies a set portion of recycled content overall by a third-party certificate.
The UK Government hopes that the mass balance approach will encourage investment in chemical recycling to develop solutions for harder-to-recycle items such as black and flexible plastics.
Chemical recycling is a process that breaks down plastics into their chemical components, which can be used to produce new plastic products.
The Government believes that using the mass balance approach will help support the development of circular economy practices in the UK.
Results one year on exceeds expectations
Earlier this month, HMRC confirmed that the Plastic Packaging Tax raised almost £208 million (US$261.86m) within its first nine months of operation.
This puts it on course to generate around £277 million (US$348.73m) within its first year of operation. For context, HMRC initially estimated the tax would raise around £235 million (US$295.86m) within a year.
“That the level of tax paid has surpassed Government estimates should act as a warning that we have a long way to go on improving the circularity of plastic packaging,” said Valpak’s chief executive Steve Gough.
“Companies need to urgently put in place in strategies around plastic packaging that not only meet regulatory demands – now and in the future – but also continue the drive to a circular economy.”
Gough called the tax “a clear economic incentive”, but some environmental groups have claimed this is not the case.
They have called for an increase in the tax rate, an increase in the threshold of recycled content required in a product to qualify as tax-free and independent auditing of companies’ returns to improve the effectiveness of the tax.
City to Sea’s policy manager Steve Hynd said: “When this tax was launched, we warned that it was unlikely to affect consumer behavior or drive a substantial shift in the markets.
“It was a missed opportunity when the government could, and should, introduce a plastic tax at the point of sale. Instead, this tax is lost in spiraling inflation and an increased cost to consumers.
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