Shoppers to Pay Price of New Packaging Tax
- gillmcshane
- 14m
- 2 min read
Over 80% of the costs for the new packaging tax – the Extended Producer Responsibility (EPR) scheme – are likely to be passed onto consumers, according to new figures from the British Retail Consortium (BRC).
The survey of leading retailers highlights the “significant financial burden” that EPR fees, which came into effect at the start of this month, will place on UK retailers and households.
With prices set to increase as a result, the BRC is calling on the government to provide greater clarity on how consumers and the environment will benefit.
The UK retail trade body said the industry has been left with little room to absorb additional costs following last year’s Budget, where retailers were hit with £5bn in extra employment costs due to higher employer National Insurance and rising National Living Wages.
With EPR set to cost the industry billions, BRC described this new tax as "yet another inflationary pressure”, at a time when food prices are already rising fast.
The Bank of England estimates that the policy alone will add 0.5% to food inflation, according to its August Monetary Policy Report.
In addition to the financial impact, 85% of retailers surveyed said the administrative and compliance burden they face has increased significantly as a result of EPR.
Firms are now required to report extensive information on the composition and amounts of packaging they are putting on the market. This creates further pressure on businesses already grappling with rising costs and a heavy regulatory burden.
The new packaging tax is levied on any company which produces packaging bought and disposed of by households, this includes retailers and brands. The fees are based on the materials and amounts used.
Retailers are making every effort to use more recyclable materials and less packaging, with the survey finding that:
Some 85% of retailers intend to increase the proportion of sustainable packaging placed on the market.
Almost four in five retailers (78%) intend to reduce the total volume of packaging they place on the market.
More Government Clarity Needed
However, with prices set to increase as a result of the new tax, BRC called on the government to provide greater clarity on how consumers and the environment will benefit.
The organisation is urging the government to put in place legal restrictions (ringfencing) to ensure the money raised from EPR can only be used by local councils to collect and operate local recycling, as well as fund improvements to local recycling systems.
Andrew Opie, Director of Food & Sustainability at the BRC, explained: “Retailers support the polluter pays principle and are making significant changes to reduce and improve their packaging. But the packaging tax is also a multi-billion pound levy being paid by consumers during a cost-of-living crisis. They will ask: what are we getting for higher prices?
“Unless funds are spent transparently and effectively, EPR threatens to just be another burden on an already overtaxed industry with no tangible benefits for customers or the environment.”