The Government’s proposal to establish a tax on plastic packaging could cost households 7p per week, according to new research.
The estimate assumes the tax cost is transferred to households by packaging producers and retailers. It also considers projected levels of recycled content in packaging.
The cost has been derived from research undertaken by Imperial College on behalf of waste management firm Veolia.
When the market demands it [material], we will invest and provide it, and the tax will accelerate this demand
It considers the case of the proposed plastic packaging tax in the UK that will apply to all plastic packaging with less than 30% recycled content that is manufactured in the UK, as well as unfilled packaging imported into the country.
It evaluates the cost of this tax, based on the price difference between recycled and virgin plastic, for all plastic packaging to reach the target of a minimum of 30% recycled content.
The whitepaper finds the tax will provide “assurance to the recycling value chain and stimulate new investment in domestic recycling infrastructure, as well as an incentive for the packaging sector to look towards green product design and resource security”.
Plastic packaging tax
The UK is currently considering the introduction of recycled content targets to support the use of secondary plastic in domestic production and manufacturing processes and a future plastic packaging tax as a flat rate tax on packaging to support this.
Considering that the main reason for not using recycled plastic is that virgin plastic costs less, the proposed tax would have to compensate for their price difference to make recycled plastic competitive, the research states.
Moving from virgin plastics to using recycled alternatives is essential for the environment, makes long-term financial sense and reflects public expectations
With the price difference between recycled and virgin plastic currently estimated around £500 per tonne, the minimum tax level needed to make costs to industry similar between using 100% virgin plastic packaging and packaging with a minimum 30% recycled plastic content, comes to £150 per tonne (0.015 pence per gram), according to the paper.
Richard Kirkman, chief technology and innovation officer, Veolia UK & Ireland said: “Moving from virgin plastics to using recycled alternatives is essential for the environment, makes long-term financial sense and reflects public expectations.
“A packaging tax is designed to set a level playing field for companies using recycled content and will enable an additional two million tonnes of packaging to be recycled in the UK.
“It is now up to government to go through with it and adopt this policy – a minimum of 30% recycled content in packaging.
“There currently is not enough material recycled to feed this desire – and that’s precisely the point – when the market demands it, we will invest and provide it, and the tax will accelerate this demand.”