Plastic packaging tax – supermarkets start to sweep shelves of plastics

The introduction of plastic packaging tax (PPT) in April 2022 was meant to provide businesses with a real, economic incentive to better use recycled plastics within their packaging. The aim of this was to reduce plastic waste and hence, lower greenhouse gas emissions. A year on, data on the tax’s first year of operation has been published by HMRC. We review whether PPT’s implementation has had its intended effect and its impact on businesses. 

Revenue

PPT receipts collected by HM Revenue and Customs (HMRC) in the financial year 2022 to 2023 totalled £276m. This is a significant amount, especially given the consideration that it is £41m over the governments initial prediction of £235m. Even though this is the first year of PPT and there is no comparable, historic data, this statistic suggests that the government has overestimated how effective PPT would be at deterring business from using virgin plastics. 

Nevertheless, one might logically think that the revenue bought in by PPT could be used to further environmental objectives. However, we were unable to locate any information on how the government has, or intends to spend the tax revenue generated by PPT.

Business Impact

UK supermarket chain Aldi has reportedly begun a trial to reduce plastic packaging by removing net bags from garlic, limes, oranges and lemons in some of its stores. If this were to be introduced into all stores UK wide, they estimate that 94 tonnes of plastic packaging would be removed from shelves each year. 

This is an example of a large corporate established in the UK reducing their plastic consumption which also has the added benefit of a smaller PPT bill. Though only a small step, changing consumer mindsets coupled with the introduction of PPT could lead to a reduction in the UK’s plastic consumption.

With the rate of PPT having increased from the initial £200 charged on each tonne of plastic with a recycled percentage of less than 30% to £210.82 for 2023/24, it will be interesting to see whether this amplifies the desired effect of the tax. For the example provided, businesses such as Aldi are already trialling solutions to reduce their plastic consumption. However, looking at PPT’s first year, we can see that a lack of transparency and an underestimation of the tax’s efficacity could cause problems in achieving its environmental goals.