Food companies have criticized the UK tax on plastic packaging as too strict

Food makers have criticized the introduction of a new UK green tax, warning it will force them to raise prices for consumers at the risk of fueling inflation.

Several major food companies and industry figures told the Financial Times that businesses are finding the plastic packaging tax, which is due to take effect on April 1, difficult to understand and comply with.

The levy, announced by then-Chancellor Philip Hammond in the 2018 budget, aims to incentivize companies to use recycled plastic in the manufacture of plastic packaging.

Companies that produce or import 10 tonnes or more per year of plastic packaging containing less than 30 per cent recycled plastic will be taxed at £200 per tonne. Plastic packaging made from at least 30 percent recycled material is exempt from the tax.

However, food manufacturers said the government has not provided exemptions for materials that come into contact with food and cannot be recycled. As a result, these companies had no choice but to pay the tax – resulting in increased costs that might have been passed on.

Nicki Hunt, Director of Sustainability at the Food and Drink Federation, said: “Food and drink manufacturers want to do the right thing and recycle more packaging – in line with the UK Government’s environmental goals and our own – but efforts are constrained by constraints around the materials that may come into contact with food that currently cannot be recycled and are subject to the new plastic packaging tax.”

She added: “This results in further costs being imposed on businesses, which may result in higher prices for consumers. Our industry would prefer government action to further support and encourage innovation in recyclable packaging materials.”

A source from a major food company said the way the tax had been introduced was “very contradictory as there would be no incentive to use recycled content – the real aim of the plastic tax”.

Helene Roberts, chief executive of Robinson Packaging, a plastics recycling company traded to Aim, and head of the British Plastics Federation’s plastics and flexible packaging group, said inflation is an unintended consequence of the tax.

Food-grade items that can’t use recycled plastic — like soup pots — should have been exempted until technology advances in a few years, she argued. “It will only create inflationary pressures within the supply chain.”

According to advisers at accounting firm RSM, a wide range of companies would be affected by the new tax, including retailers who import items like bin liners, water bottles and tote bags, publishers who import plastic to laminate books and freight carriers who use plastic packaging such as bubble wrap. But food manufacturers would be hit the hardest.

Andrew Thurston, customs adviser at MHA, an accounting group, warned that it is also “difficult and costly” for importers to obtain certification of the recycled content of packaging from overseas suppliers. This could result in companies ignoring calls to use more sustainable materials and “defeating the purpose of the tax,” he said.

The government said it has been working closely with industry, including the food packaging sector, to “ensure businesses are getting the information they need”.

“Tax exemptions have been kept to a minimum to encourage greater use of recycled plastic and stimulate the recycled plastic supply chain,” it said.

It added: “Food packaging accounts for around 40 per cent of packaging in the UK, so excluding it from the tax would greatly mitigate its impact. Many types of food packaging already contain recycled plastic or use alternative materials to plastic.” Food companies have criticized the UK tax on plastic packaging as too strict

Adam Bradshaw

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