The UK government are soon to be one of the first globally to introduce a tax focussing on plastic packaging. The objective of the tax is to incentivise the use of recycled polymer in packaging, in turn increasing demand for recycled material and therefore recycling. Ultimately cutting down the amount of plastic that ends up in landfill. This comes on the back of well published campaigns and public appetite to cut down our reliance on single use packaging, a problem that needs to be tackled and this is fiscal policy designed help. However as the scope of the tax is firmed up, it has become clear that alongside the single use plastic, reusable storage equipment and return transit packing such as delivery crates, stacking containers and warehouse totes all fall within the tax, despite the fact that they are very much designed for repeat use. We have therefore taken a close look at the details to understand some of the implications. Did I mention that this is coming into effect on the 1st of April?! So here is a brief overview of the tax, looking specifically at how it will effect the companies we support and the re-usable plastic products used across supply chains and manufacturing.
The basics – The tax applies to plastic packaging, manufactured or imported the UK, containing less than 30% of recycled material content. Plastic packaging containing over 30% of recycled content will not be liable for the tax, which is the incentive for manufacturers to use recycled material where possible. It is the manufacturers or importers, producing / importing over 10 tonnes of plastic packaging that are liable for the tax, calculated at a rate of £200 per tonne. For the average consumer or user of plastic packaging, you will not need to do anything different, but whilst the tax itself falls on the manufacturers of the plastic packaging, invariably this will be passed , so price rises as a result are inevitable.
Just what is plastic packaging? The important question for us all, in relation to the tax what is considered plastic packaging? Fair to say its quite a broad spectrum of packaging and packaging components, HMRC highlight two categories of plastic packaging that fall within the scope of the tax. Firstly single use packaging designed for use by the consumer which includes things like plastic bags, disposable cups, gift wrap and ready meal pouches. And secondly packaging that is designed for use in the supply chain. This is an extensive list of products including single use items like bottles, bags, films, pallet wrap, whilst also encompassing repeat use items and return transit packaging. This is the bit that we are especially interested in, as it will effect a number of the products within our range. We understand that reusable rigid plastic items such as bale arm delivery crates, bread trays, picking bins, Euro containers, totes boxes, plastic pallet boxes and plastic pallets will all fall within the scope the tax. You are probably reading this on our website because you are a user of this type of product, if so you are probably contemplating how it will effect your business. Firstly unless you are importing products directly or are the manufacturer you do not need to worry about any additional reporting or administering of the tax, but you may see from April that some products will be effected by small price increases, if they are not made from recycled polymer. The amount of increase depends on specific products, a crisp packet for example is low weight and accounts for a small percentage of the price we pay for the overall product. So increase effect will be nominal. Considering for a moment the type of rigid plastic products that we work with , such as plastic crates, containers and pallet boxes. Again it depends on unit weight of a specific item but as a rough rule of thumb is likely to be something like a 3% to 5% increase on current costs. Whilst suppliers like ourselves will be working hard to minimise impact on our customer base, this is another factor sitting along side rising freight, production and material costs that continues to pose a challenge to the industry.
So a worthwhile question to ask is can you switch to a product that is manufactured using recycled polymer, thus avoiding the tax?
The answer will depend on 3 things, the type of equipment you use, the application and the environment in which they are used. With regards the products themselves, it is likely that some of the products you use are already available in a recycled option. This has been a long standing option for both environmental and economical reasons, with recycled material typically offering a saving when compared with virgin polymer. Many of our products are available in recycled polymer, see recycled plastic products. For many applications across general manufacturing and supply chains you could begin to switch to these recycled options. However if using the equipment in food contact applications or in controlled environments such as food and pharmaceutical manufacture , switching to recycled polymer may not be an option. Most available recycled polymers is created from a blend of reclaimed materials and cannot be supplied with any certification or approval for food contact. So if equipment is required to be “food grade” typically the available recycled polymers will not be an option. The other restricting factor is that recycled polymer is currently widely only available in black, so will not support processes that rely on colour coding schemes. As it stands in these cases the best and only option will likely be to continue to use product in virgn material, but could be an opportune moment to review equipment used to ensure products being used are the most suitable for the job in hand. We are of course available to talk through the product options and materials available. We understand that all requirements are different and our ethos is to work closely with our clients to understand their application and process. Ultimately ensuring the products in use are the best option available.
We wait to see the impact this policy has on the packaging industry and the recycling sector, lets hope it’s a positive step towards encouraging more recycling and correct disposal of plastic, without over penalising returnable and reusable packaging solutions. Disclaimer, this post is our take and understanding on the upcoming tax from our perspective, an idiots guide if you will. For more detailed information visit HMRC website.