Will the Plastic Packaging Tax contribute to inflation?

Will the Plastic Packaging Tax contribute to inflation?

Amidst the rising inflation rate resulting in an ever-increasing cost of living, food manufacturers have warned that the upcoming Plastic Packaging Tax may contribute to this further.

With sustainability in mind, the Plastic Packaging Tax (PPT) is set to be introduced on 1 April 2022 as a central aspect of the Government’s environmental ambitions.

The scheme aims to make the food production industry more environmentally friendly, by imposing a tax on the manufacturing, as well as importing of plastic packaging that contain less than 30 per cent recycled content.

The tax will be required to be paid quarterly, at a cost of £200 per metric tonne of plastic packaging.

What is the proposed impact of the tax?

Businesses will be liable to pay the tax if they produce/ import 10 or more tonnes of plastic packaging annually.

All companies that manufacture or import plastic packaging will also be required to maintain records on this.

Whilst this is bound to bring about positive change for the environment, food manufacturers have warned that the tax may have an inflationary outcome for consumers.

According to the Financial Times, some manufacturers have commented on the Government’s lack of exemptions for non-recyclable plastics that have come into contact with food.

Resultingly, businesses will incur the additional costs of the tax, which in turn may be passed onto consumers.

Some of those within the food industry have commented that as some food-grade items are unable to contain recycled materials, they should have been exempt from the tax until technology makes this possible.

Nicki Hunt, Director of Sustainability at the Food and Drink Federation, commented on this tax:

“Food and drink manufacturers want to do the right thing and recycle more packaging — in line with the UK government’s and our own environmental targets — but efforts are being constrained by restrictions around the materials that can have contact with food, which cannot currently be recycled, and are subject to the new plastics packaging tax.”

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