It has been a year since the introduction of the UK’s plastics packaging tax and its effects have been felt throughout the industry. Freedom of information (FOI) uncovered that the tax has already generated over £200m in revenue and is on course to exceed HMRC’s first year target by more than £30 million.
UK plastics packaging tax: one year on
Data provided by Petal&Co breaks down the effectiveness of the tax further; Tax revenue in each of the three quarters averaged £66.7 million. If the trend continues in the last quarter, total PPT revenue for the first year will top £266 million. Around 1 million tonnes of plastic packaging were liable for the £200 per tonne tax (i.e., packaging that did not contain at least 30% recycled plastic content) Over 254 million tonnes of plastic packaging were declared by companies. 61% of all declared packaging was tax exempt, and 220 companies completed PPT returns during the third quarter (October to December 2022). This was 38% higher than the 2,328 companies that made submissions during the first quarter of the tax.
Industry opinion on the tax remains cautiously optimistic, the tax is seen as a generally progressive step however this is tinged with the feeling that it may take time gauge a true reflection of how the tax is performing, this is reflected in the comments of Zoe Brimelow, Director at Duo, who said: “It’s much too early to say whether the tax is a success or failure. Just because the tax’s first-year revenues are likely to smash projections, it doesn’t necessarily suggest the tax isn’t encouraging greater use of plastic packaging containing at least 30% recycled plastic. If anything, first-year revenue projections aired on the side of caution.
“Similarly, we shouldn’t read too much into a decline in PPT-exempt packaging in quarter three. The quarterly increases in the number of businesses submitting returns suggest companies are still getting to grips with the new system. We will be able to draw firmer conclusions about the effectiveness of the tax in the next 12 months.”
Although the figures suggest there has been a huge increase in PPT (Plastics Packaging Tax) declarations during the buzz of the initial stages of the tax, Brimelow points out that there is a natural drop off in plastic packaging declared under the legislation during some parts of the year, especially during the back end of a calendar year, a reflection that the market isn’t always harmonious: ““It’s not unusual to see a drop off in packaging volumes during the third quarter (Oct – Dec 2022) because retailers and businesses buy ahead. At this point, they would have been thinking about declining sales after Christmas and New Year and adjusting their packaging orders to suit this.”
One year on, as the analysis begins to dissect whether the legislation is a success, the most likely answer is that the industry just doesn’t know yet. If it was a boxing match, the PPT had landed some significant blows on its critics by surpassing its financial targets. However, the PPT must prove its longevity to land that final blow and silence doubt over its effectiveness.