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The Plastic Packaging Tax: does it go far enough or fall short of addressing the important issues?

A new tax on some types of plastic packaging is set to come into force in the UK in April 2022. It will be implemented on finished plastic packaging components manufactured in or imported into the UK in which less than 30% of the plastic is recycled; that is coming from pre-existing plastic not new or virgin material. The government says the aim of the tax is to “encourage the use of, and increase demand for, recycled plastic rather than new plastic within packaging. In turn it will stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.” After speaking with Jim McClelland for an article about the Plastic Packaging Tax, published in Raconteur’s ‘Future of Plastics’, a supplement in The Times on 24th May, we caught up with our CEO, Santiago Navarro, about the tax’s upside and shortcomings, and his insights on areas for improvement.  

Santiago Navarro, CEO & co-founder

Q: Santiago, what is your overall take on the Plastic Packaging Tax? 

A: In my view the Plastic Packaging Tax (PPT) is likely to have some level of efficacy, but it seems to be way too simplistic in a complex space. The PPT is created in a way like having Income Tax set at one level for everyone, meaning it would be most impactful to those at either end of an income spectrum. Income levels are complex, plastic types are too. They both require differentiated, tiered tax systems to ensure that they achieve an equitable outcome. We do this with Income Tax, and we should be doing this with any plastic tax too.

Another major issue is that restricting this to just packaging seems to be just potentially addressing one part of the issue. In the UK, and according to the British Plastics Federation, 44 percent of plastics consumption goes to packaging. This seems to be an unjustified tax on just packaging, when if the aim is to encourage better use of plastics in circular models, then it should be a blanket Plastic Tax, not a Plastic Packaging Tax.


Q: In the interview with Jim, you made a great comparison that grouping all polymers into the simplistic term plastics is as troublesome as grouping all vehicles into the simplistic term cars. Can you elaborate on why being over simplistic is such an issue when it comes to this tax?

A: In the same way that the UK government plans to ban the sale of new petrol and diesel cars from 2030, not all cars but specific ones based on their engines, fuel, and resulting emissions, then the same specific approach should be taken with plastics and packaging. Not all plastics are created equal and not all have the same end of life performance when it comes to recycling for circular economy. Grouping seven highly different polymers into one grouping of ‘plastic’ will definitely negatively impact the good plastics like PET which is commonly recycled and highly recyclable, and not sufficiently penalise bad plastics like polystyrene which are almost never recycled. PET, and moreover recycled PET, is a wonder material and should not be grouped in with other plastics. In my view, there is no benefit of doing this – bundling PET or recycled PET in with other plastics – to our planet, government, companies, or consumers.


Q: Do you think the PPT will be successful for the government?

A: Implementation of the PPT can definitely be successful for the government as it is likely to drive extra revenue for HMRC. Whether it is successful for the government’s environmental goals, is less clear at this time. Ultimately, a tax of £200 per tonne on packaging that is usually very lightweight is also quite lightweight on its financial impact. If one takes an average of 50 grams for a plastic packaging product, then this would equate to a penny of tax on the product. Whilst a penny for large volume, competitively priced products is noticeable, I would argue that it is hardly game-changing. If the recycled content ends up costing more than the tax, then this would even worsen this position. Another comparative is the 10 pence for plastic shopping bags to put this into perspective.


Q: The plastic shopping bags charge is an insightful comparison – and government data shows that sales of single-use plastic carrier bags fell by 95% in England’s main supermarkets since the charge was introduced in 2015. Will the PPT have a similar behavioural impact on businesses and consumers? 

A: Whether the tax will be successful in making businesses use and consumers purchase more recycled plastics is questionable. The simplicity of the system, the level of the tax, and the complexity of the subject seem to be too disconnected for this to result in the success that it should be and could have been if this was better structured.

Garçon Wines' sustainable, flat wine bottles - made from 100% recycled PET


Q: When it comes to environmental issues, plastic pollution gets a large share of the limelight. How do you think this tax sits in relation to other environmental issues the planet and industry are facing?  

A: The tax will have some influence on the market for plastic packaging, but the climate crisis is likely to have the biggest impact on the overall packaging industry, regardless of the material that packaging is made from. In early May 2021 we repeatedly surpassed 420 parts per million (ppm) of atmospheric CO2. In 2015, we surpassed 400 ppm. So, it is now looking extremely likely that we could surpass 450 ppm by 2030. Scientific advisors on the Intergovernmental Panel on Climate Change (IPCC) have estimated that we should limit atmospheric CO2 to no more than 430 ppm for holding the global average temperature increase below 1.5 degrees Celsius and no more than 450 ppm for 2 degrees. As we reach and surpass 450 ppm, a plastic packaging tax will be the least of our concerns or focus. Many of us will experience highly challenging issues which would likely also make this current health pandemic look like a walk in the park. As such, I hope to see this tax evolve to be one which is material agnostic but carbon footprint specific. If it continues to focus on ‘plastic’, then all seven plastics types as defined by the Society of Plastics Industry (SPI) codes, should be considered individually.

Q: At Garçon Wines, and spearheaded by yourself, we’re very proud to already be using 100% recycled PET (SPI code 1), in our sustainable, flat wine bottles. Are there any measures you think would be helpful to balance the tax and reward those achieving more circular models? 

A: The government should be penalising and incentivising in equal measures. The current proposed tax will penalise those who do least or worst but does not incentivise those who do most or best. The government recognises those who take risk and build businesses, and incentivises them with an exceptional measure like Entrepreneurs’ Relief, now called Business Asset Disposal Relief. This reduces Capital Gains Tax. If the government is serious about encouraging the use of better plastics in circular models, then they should consider a Circular Plastics [Packaging] Relief, not just a Plastic [Packaging] Tax.


To read Jim’s original article, published in Raconteur in The Times in May 2021, head here



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