Revamping UK's Plastic Tax: A Sustainable Move

The Plastic Packaging Tax, a key legislative measure implemented by the UK Government in April 2022, is poised for reform. This tax, which charges £200 per tonne on plastic packaging comprising less than 30% recycled content, covers both imported and domestically manufactured packaging. Ministers have argued that revising this tax could potentially drive funding towards scaling chemical recycling innovations.

Recently, the Department for Business and Trade, along with the Treasury, proposed a raft of modifications to the UK's tax system. Included in these proposals was a significant adjustment to the Plastic Packaging Tax. Specifically, they suggested employing a 'mass balance' approach to determine the percentage of chemically recycled content present in plastic packaging.

In 'mass balance' accounting, although a specific piece of packaging might not contain recycled material, a fixed proportion of recycled content is verified via a third-party certificate. Mass balance methods are often utilised in sustainability certification schemes associated with commodities such as cocoa, soy, and timber.

Adopting the mass balance approach, as per the Government, could channel investment towards chemical recycling – a necessity for developing solutions to recycle more challenging items like flexible plastics and black plastics.

During the course of 27th July, 23 technical tax updates were unveiled.

A year after its introduction, HMRC confirmed that the Plastic Packaging Tax had generated almost £208m within its first nine months of operation. This puts it on track to yield approximately £277m within its first year. It's important to remember that the initial estimates from HMRC suggested a yearly tax revenue of around £235m.

Valpak's chief executive, Steve Gough, suggested that the tax's exceeding government estimates indicates that substantial work lies ahead to enhance the circularity of plastic packaging. He highlighted the pressing need for companies to implement comprehensive strategies around plastic packaging to meet regulatory demands and promote a circular economy.

Despite its success, the tax hasn't been universally welcomed. Some environmental groups have claimed it doesn't effectively incentivise sustainable behaviour.

Plastic Planet co-founder Sian Sutherland, who is also the co-founder of PlasticFree, lamented that the tax is seen by big plastic and industry as merely a business cost. She has called for three major changes to the tax: doubling the rate, increasing the threshold of recycled content required for a product to qualify as tax-free, and instituting independent auditing of companies' returns.

Without such changes, critics argue, the tax remains more symbolic than restraining – a disappointing outcome for those who lobbied tirelessly for its inception. The need for reform, therefore, is both immediate and compelling.