Plastic Tax and the Food and Drink Industry

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Chancellor Philip Hammond recently presented the Budget 2018, which has been naturally controversial as usual. However, one policy introduced which has received mostly positive press is the new ‘plastic tax’. The food and drinks industry is one that will be most affected, and also one that Virtual College offers a number of online training courses in. With this in mind, we’re going to briefly cover what we know so far, and what this might mean for the industry.

The first thing to point out is that this is not the same as the long-rumoured ‘latte tax’ or ‘latte levy’, which would impose taxes on non-recyclable disposable cups, nor is it related to the EU’s plans for taxes on certain single use plastics such as straws. The former was not included in the budget to the dismay of many environmental campaigners, but the new plastic tax has been generally welcomed. Hammond’s plan, in short, is to place additional taxes on the manufacture and import of plastic packaging that contains less than 30% recycled plastic, and these new measures will be introduced in 2022. The aim is to ensure manufacturers in this country pursue more sustainable production, and that British businesses cannot easily circumvent these rules.

Will the plastic tax apply to my business?

It’s important to note that this is all that has been definitively released at this point, which means that we cannot know for certain the amounts of tax that will be imposed, or if there are any other criteria or thresholds such as company size. Specific details have not been given, which means that many commentators have warned that the devil will be in the details, particularly as the rest of the budget was light on environmental concerns. However, we can speculate on some of the impacts this may have on the food and drinks industry.

Fortunately, the food and drinks industry is generally effective at using recycled products already. The vast majority of plastic milk cartons are recycled and made from recycled plastics for example, which means that for a lot of businesses, there will be no impact at all. However, there are still very large numbers of products on the market that are using plastics that are neither made from recycled materials nor are they easily recycled by the general public, including things like black plastic trays. These products will need to change, or the additional taxes could prove damaging. If a manufacturer chooses to absorb the cost, then the expense will naturally eat into their revenue. If they attempt to pass it on to the retailer, or the end customer, then market share could be lessened as more environmentally conscious - and cheaper - products appeal to customers. While this policy could cost some businesses money, we would advocate that they should be moving towards fully recycled and recyclable products regardless.

What impact will this have on the food and drinks industry?

Many businesses will be pleased to hear that the tax will not be introduced in isolation, and there will be support for the pursuit of sustainability. Along with the tax, Hammond has pledged £40m of funds that will go into various initiatives designed to improve take up of recycling, as well as research and development of new technologies to make recycling and the manufacture of recycled products even more viable.

There are several years before this policy becomes law, which means there’s plenty of time for it to change, or other similar policies to be put forward. We’re even due an election before they are introduced! It’s for this reason that many see this policy as less important than it may seem at face value. Many businesses are already adhering to the standards, and it’s a goal that most of the rest are already working towards. However, most initiatives that ensure the food and drinks industry is boosting its environmental credentials are good ones. Keep an eye out on our food and drinks page for further updates in regards to this and similar policies affecting food and drink businesses.

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