The Plastic Packaging Tax Applies from 1st April 2022. Are you ready?

Plastic pollution is an extremely serious environmental issue that has destroyed habitats, disrupted food chains, and cost millions in clean-up efforts. Plastic is heavily used for the packaging of goods, making the upcoming Plastic Packaging Tax (PPT) a positive step forward. In this article, we review the new tax, and assess how it may impact businesses and consumers.

Why is plastic so bad?

As a society, we are extremely reliant on plastic. It’s cheap, strong, lightweight, and flexible, making it a valuable resource. However, plastic falls victim to a throw-away culture, often discarded after just one use. In fact, single-use plastics make up 40% of all the plastic produced each year.

Plastic production is powered by planet-warming fuels, meaning our reliance on plastic contributes to global warming, and prolongs our dependency on fossil fuels. The main reason plastic pollution is such a big problem is that the material takes an extremely long time to decompose. For instance, plastic bottles can take up to 450 years to decompose in landfill.

Plastic pollution has devastating effects on marine life, killing thousands of sea turtles, seabirds, and seals and other marine mammals each year. On land, millions of animals are killed by plastic annually, mainly due to entanglement. Plastics pollute water and can find their way into our food chain, causing further challenges to our health.

The Plastic Packaging Tax (PPT)

The UK’s PPT comes into force on 1 April 2022, and will be charged at a rate of £200 per tonne of plastic packaging. According to the government, the PPT ‘only applies to manufacturers and importers of plastic packaging components which contain less than 30% recycled plastic.’

The new tax aims to increase the amount of recycling, and ensure that more recycled packaging is used in the production of plastic packaging. Even though the rate of recycling has grown in recent years, only 9% of all the plastic produced around the world has been recycled. Approximately 79% is in landfill, dumps, and the natural environment, while 12% has been incinerated, releasing dangerous gases into our atmosphere.

Forecasted Success

The Treasury has predicted that, following the introduction of the PPT, the use of recycled plastic packaging will increase by around 40%. This anticipated increase will reduce the amount of carbon produced by almost 200,000 tonnes between 2022 and 2023.

Some environmentalists, however, argue that the new tax isn’t ambitious enough to reduce plastic pollution in a meaningful way. City to Sea’s CEO, Natalie Fée described the tax as ‘just another drop in a very plastic-polluted ocean’, and argued that the government needs to take stronger action to reduce the amount of plastic produced each year.

The Impact on Business

The new environmental tax will affect a huge range of businesses, equating to around 20,000 manufacturers and importers. To be effective, the PPT will need to impact more than the businesses that produce plastic packaging. If UK companies import goods from overseas, they will need to acquire information from their suppliers regarding packaging content, and may even become liable for paying the tax themselves if the packaging doesn’t have at least 30% recycled materials.

With online shopping constantly growing, eCommerce businesses will be wondering whether products such as plastic strapping, corner protection strips, and plastic wrap are liable. These types of plastic packaging are regularly used to protect products in transit. Under the PPT, transit packaging is not liable, but any UK sourced or UK added packaging will be.

The Reporting Process

In response to the planned PPT, many UK businesses are assessing their suppliers and checking whether the packaging comprises less than 30% recycled plastics. If a business has imported or manufactured more than 10 tonnes of plastic packaging within the last 12 months, it will need to register for the PPT.

Liable businesses must produce quarterly reports detailing the tonnage of plastic packaging components manufactured in, or imported into the UK. The report must also confirm the percentage of recycled materials that make up the plastic packaging.

How will businesses respond?

Businesses that know they’ll be affected by the new PPT have a few options:

  • Ensure that their packaging contains over the 30% threshold of recycled plastics
  • Absorb the costs of the PPT
  • Increase prices to offset the higher costs

The Impact on the Consumer

In theory, PPT should not impact the consumer unless a business decides to pass on the additional costs. With customers becoming increasingly environmentally conscious, businesses that simply increase their prices to cover PPT will not be well-regarded.

Consumers will want to see businesses switching to sustainable packaging options which consist of much more than 30% recycled materials. Making this switch to more sustainable practices will ensure businesses can avoid paying PPT, whilst also reducing their environmental impact, and improving how customers perceive their brand.

Summary

The new tax should help to increase recycling, and raise awareness of plastic pollution amongst businesses. By pushing for recycled plastic to make up at least 30% of plastic packaging, the PPT brings us closer to a greener future. Businesses that continue to use unsustainable packaging will suffer the impact of PPT, providing them with added incentive to change their practices.

If you’d like to talk to an order fulfilment specialist about your transit packaging or any other aspect of your eCommerce process, please contact us.

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