Plastic packaging tax: Why experts fear it might seriously backfire

Last month, the UK plastic packaging tax came into effect, which will see manufacturers and retailers paying much higher rates for using virgin plastics.

While on the surface this is a step in the right direction to curtail the amount of new plastic being generated, some environmental and business experts are concerned that the increased demand for recycled plastics may drive prices up and make the tax a more attractive option.

Here’s everything you need to know about the plastic packaging tax and the potential bumps in the road that lie ahead.

What is the UK plastic packaging tax?

The plastic packaging tax was first announced in the Budget 2018 and came into effect last month (April 1, 2022). It applies to any plastic packaging containing less than 30% recycled plastic that’s either manufactured in or imported into the UK at a rate of £200 per tonne.

The aim of the plastic packaging tax is to deter manufacturers from using virgin plastics and boost the uptake of recycled materials.

Prime Minister Boris Johnson himself claimed “recycling doesn’t work” in a controversial statement made at a press conference for children last year, going on to say that the nation must “cut down on our use of plastic.”

Plastic packaging is one of the worst culprits clogging up UK landfill sites, seas and streets. It’s notoriously difficult to recycle (it can only go through the current mechanical process a few times before the polymers break down too much) and the average person struggles to understand what plastics can and can’t be recycled.

MORE: 10 common recycling mistakes you’re probably making

New innovations in recycling have emerged, such as chemical recycling, that allows for a wider range of plastics to be recycled, but a lot of experts agree the long-term solution is to discourage its manufacture in the first place.

Who pays the plastic packaging tax?

The plastic packaging tax applies to any business that manufactures or imports more than 10 tonnes of plastic packaging in a 12-month period. This includes packaging manufacturers, retailers, publishers, logistics, and food makers.

According to the government, the plastic packaging tax is expected to impact some 20,000 businesses in the UK.

It is unclear exactly how the tax will be shared between suppliers and retailers, prompting fears that the plastic packaging tax could be used as a bargaining chip against smaller companies.

Of course, businesses are likely to have no choice but to pass these taxes onto the consumer, meaning the average supermarket shop that includes products in plastic packaging is likely to be a bit more expensive too.

Are all kinds of plastic packaging subject to the tax?

It’s not only plastic bottles that are in the firing line for the tax hike: carrier bags, bin liners, bubble wrap, bin liners, food packaging and even plastic for laminating books and magazines will feel the sting.

Compostable and biodegradable plastics aren’t exempt either because it’s incompatible with the UK recycling infrastructure due to cross-contamination with both organic matter and other plastics.

However, plastic packaging for “immediate packaging” of medicinal products is exempt, as is the plastic used to transport pharmaceutical imports.

Food packaging manufacturers are going to have a particularly hard time finding alternatives because readily available recycled plastic doesn’t meet hygiene standards.

Nicki Hunt, director of sustainability at the Food and Drink Federation, said that while food and drink makers want to use more recycled packaging, it’s simply not realistic with current alternatives available.

She told the Financial Times, “The result of this is that further costs are placed on businesses, which may lead to higher prices for consumers. Our industry would prefer government measures to further support and incentivise innovation in recyclable packaging materials.”

Companies like NEXTLOOPP are developing food-grade packaging from recycled polypropylene, but solutions like this will need to be produced cheaply and at high volumes, something that may prove tricky in the short term as demand increases.

Is the plastic packaging tax really necessary?

The UK’s desire to change is clear. A recent YouGov study for GreenPeace UK revealed that 85% of UK citizens are keen for retailers to reduce the amount of plastic packaging.

The nation is the largest producer of plastic packaging waste per capita in Europe, with the average person generating 98.6 kgs of waste.

According to the British Plastic Federation’s Recycling Roadmap 2021, the actual total of plastic packaging waste is 2.3 million tonnes a year, 64% of all plastic waste.

And it’s not just the UK that’s suffering from the high levels of plastic packaging waste we produce.

Recently, it has been revealed that thousands of tonnes of illegally exported recyclable materials – much of which is incorrectly labelled – has been making its way to south Asian countries.

This further highlights the need to reduce the use of virgin plastics in the first place to drive up the demand for recyclable materials and create the infrastructure to handle it domestically.

So how could the plastic packaging tax backfire?

One major factor in the effectiveness of the plastic packaging tax is the high cost of recycled plastic, which will only increase further with demand.

If suppliers are to be persuaded to ditch virgin plastics in favour of recycled plastics, there would need to be a clear cash incentive.

However, it appears some businesses are more put off by the price of greener materials than the plastic packaging tax designed to increase its uptake.

According to Helen McGeough of commodity intelligence firm ICIS, some companies are seriously considering a move back to virgin plastics to save money.

She told MRW, “Particularly in the sheet and thermoforming sectors, which are not under the same regulatory pressure as the beverage bottle sector – but only if PET prices remain around current levels and availability improves.

“For the majority of end-users manufacturing food contact products, it will dissuade them from increasing recycled content levels due to the cost, effectively thwarting their progress to higher recycled content ambitions this year.”

Maja Darlington, from Greenpeace UK, told National World that the plastic packaging tax is only one piece of a larger puzzle in tackling the plastic waste problem.

She said, “The tax will only be effective alongside other measures to address the plastic pollution crisis at source, including an ambitious target to cut single-use plastic by 50% by 2025 and moving towards reusable solutions which cater to everyone’s needs.”

What’ll happen now?

Time will tell what direction manufacturers will go once the availability of virgin plastics from Asia increases later in the year after recent shortages.

The tax should serve to speed up and incentivise action on a promise several businesses have already signed up to: the UK Plastics Pact, which is a pledge to have 30% recycled plastic in their packaging by 2025 (as well as other ambitious targets).

Businesses manufacturing or importing plastic packaging should have already carried out an assessment of their liability and explored alternatives.

And as the market shifts to offer new recycled plastic packaging products, it’s worth keeping an eye on changing prices and opportunities to avoid the plastic packaging tax and move towards a circular economy that’s better for the UK.

SunSkips recycles plastics managed at its sites across East Anglia using a meticulous screening line. Choose waste management professionals that are environmentally responsible and avoid unlicensed services that may dump waste in our countryside.