Chris Sanger, EY’s Head of Tax Policy comments:
“The Budget included the publication of a further consultation on the Plastic Packaging Tax, which imposes a tax on plastic packaging containing less than 30% recycled plastic. This builds from the government’s Call for Evidence on single-use plastic waste in 2018 which highlighted that using recycled plastic is often more expensive than using new plastic. At Budget 2018, the government proposed to use a new tax to encourage the use of recycled plastic and published the responses from the first consultation last year.
“Today, the Budget announced some changes to the original plans, addressing some of the flaws in the original policy, such as the incentive to package goods outside the UK and import the filled plastic packaging. Under the revised policy imported filled plastic packaging will be taxed, removing this incentive. The new model will also include exemptions for medical use, but does not yet recognise that regulations restrict the use of recycled plastic in much food packaging.
“The environmental credentials of this tax rely on the fact that increasing the use of recycled plastic will reduce the overall plastic waste. In many situations this may be the case, but there are clear examples where the move to incorporating recycled plastic could well increase plastic waste. Those reading through the consultation document will hope that the Treasury remains open to addressing these issues, as well as the more technical elements of tax design.”