Will a plastic packaging tax really work? - The Sterling Choice
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Will a plastic packaging tax really work?

We’re all aware that single-use plastics are bad. There has been a plethora of activity surrounding plastic straws, single-use coffee cups and food packaging for some time. The use of bio-based packaging has been mandatory in France since 2015. Germany has also taken action by creating rules that come into effect in January 2019. They’ve set out an initial target of recycling 63% of all plastic packaging.

Britain has already announced new packaging laws, which will give the UK’s outdated recycling infrastructure a much-needed boost. But, will taxing plastic packaging that doesn’t meet the necessary requirements for recycled content work? Or, will it just put more strain on businesses that are already facing the uncertainty of Brexit?

Global trade means global standards

It’s not just Europe that’s beginning to combat the problems caused by the mountains of environmentally harmful plastic we create. Several other countries around the world are starting to be pickier about waste produced by imported goods.

China has stopped importing 24 kinds of solid waste while increasing the infrastructure for other kinds of waste, making the UK’s setup look like it was left behind by the Flintstones. This means that countries wanting to import and sell their goods to the Chinese market must meet their standards on waste and packaging.

The EU has spent €350 million on research into plastic production and collection, in the hope they can implement a plan that will help Europe to do its part. The EU is also very likely to introduce a tax on single-use plastics.

With this level of action already being taken globally, and more to follow, keeping the UK’s standards in line with the rest of the world is crucial to creating success outside of our own borders. When you factor in the 5-year push the government is having on increasing our exports, as well as the likelihood the UK will need to look further afield to maintain high levels of growth, changing your processes and purchasing to ensure you meet even the most stringent guidelines seems like a wise move.

How will the tax work?

The new tax is due to come in to force in April 2022, but the government is unaware of any of the details or how the tax will work. They are currently consulting on strategies and approaches to try and maximise the impact the new tax will have. We do know the tax will be on both home-grown and imported plastics. It is expected to be a wide-reaching tax.

When we look at similar initiatives by the government, the rates are usually set high enough to motivate people to take action and to maximise the revenue they will collect in the short term while those slow to act get up to date.

Will it have an impact on prices?

Companies who are forced to pay the new tax may well pass the cost on to the consumer. Some retailers may also refuse to sell the products that don’t meet the guidelines.

Despite the potential for increased prices, and the likelihood of some capital investment being needed by businesses, the Treasury received 162,000 replies from businesses and members of the public in support of the idea, which sets an all-time new record for the number of people backing the idea.

The initial question asked by the government was whether they would support a tax on single-use plastics, such as straws, cups, plastic cutlery, and lids.

Will the new tax work?

It’s likely there will be a required percentage of packaging that will need to be recycled plastic in order to avoid the tax. How high the tax rate will be, and what sort of timescale the government sets for its full introduction, will determine how quickly businesses adapt their processes to take the tax into account.

Some businesses, including forty global brands and national supermarkets, are already taking steps to make sure they’re ahead of any potential changes. Companies, such as ASDA, Sainsbury’s, and Coca-Cola, have all pledged to reduce plastic packaging, while moving towards the 2025 deadline of having all packaging recyclable.

Conclusion

This tax has the potential to put increased pressure on companies at a time when trading and the GBP may have already taken a considerable blow. However, if we want to grow our status as a global player, companies must start to implement long-term strategies to ensure they exceed the requirements of most countries, leaving them free to trade in the international markets without prejudice.

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