A tax too far? UK plastic packaging law could hit consumer wallets, warns Wipak sales manager

20 Jun 2022 --- UK food packaging businesses are being forced to pay a plastic packaging tax they cannot comply with while the financial penalties ensued could force companies to push additional costs onto consumers, warns Wayne Hallsworth, sales manager at Wipak.

Speaking at the recent Packaging Innovations 2022 trade fair in Birmingham, UK, Hallsworth told PackagingInsights that the UK Plastic Packaging Tax is unrealistic because food-grade recyclate is not sufficiently available anywhere in the world. Therefore, businesses are choosing to pay the tax and pushing price increases onto consumers.

“We have decided, as a lot of our competitors have, that the plastic tax needs to be passed along the chain to the end-user – the consumer. With all of the other challenges we’re facing today, it’s another challenge for our customers that they could do without,” says Hallsworth.

“It’s not an option for us to absorb that additional cost, so we’ve passed it on, and customers have accepted it. Our understanding is that our customers are also trying to pass it onto the consumer. The plastic tax has created an additional price increase between 2 and 3%, which is not insignificant.”

“Even if we could buy the recyclate, it would have to go through the regulation and the testing, which isn’t feasible at the moment. There’s been a lot of resource and expenditure put into preparing for the tax and it’s still quite cloudy what’s actually happening: Is the tax going back into infrastructure, who knows?”

The UK Plastic Packaging Tax places a £200 (US$245) per metric ton levy on producers or importers failing to comply with the minimum requirement of 30% recycled plastic in new plastic packaging.Hallsworth wants to see more investment in recycling infrastructure to help increase recyclate supply.

Investment in infrastructure
Wipak has some customers interested in adopting plastic packaging with the necessary 30% recycled content, but lacking food-grade recyclate supply makes this challenging if not impossible. Moreover, chemically-recycled plastic, which is more readily available, is recognized as virgin material under the new legislation, meaning it does not comply with the tax.

“Most councils don’t collect flexible packaging on the curbside because the infrastructure is not there so maybe there needs to be investment in the infrastructure,” says Hallsworth.

“It’s a difficult situation because the tax is £200 (US$245) a tub, which isn’t enough of an incentivizer. People would rather pay the tax – it’s seen as preferable to being forced into other materials which they’d have to trial for shelf life, which comes with costs.”

“I’m not a fan of increasing the tax unless there’s a real-world solution too. By just increasing the tax but not having the infrastructure and the materials available to buy the recyclate is not going to fix the problem.”

We also spoke to Mondi, Schur Star Systems, Camvac and ATS-Tanner about the impacts of the UK Plastic Packaging Tax.

Wikpak calculates the carbon footprint of its paper-based solution at around 68% less.

Wipak’s carbon challenge
Wipak has a strategy to become carbon-neutral by 2025, which Hallsworth explains is a big challenge, especially since approximately 80% of the company’s carbon emissions come from manufactured raw materials.

“We need to work closely with our suppliers to understand how we can process materials resulting in less carbon. Or we need to move into other materials with less carbon footprint, for example, paper-based structures like barrier papers,” he says.

“Paper is a difficult material to package food with for all sorts of reasons, mostly because it typically doesn’t create a barrier unless it’s got a coating, so it won’t seal to itself.”

“The challenge with paper is to develop barrier papers for the shelf life that keep the food fresh and apply some kind of coating so that it can be sealed and maintain the pack integrity.”

Buttering up sustainability
The company’s UK division recently invested £5 million (US$6.1 million) in new lamination equipment. At Packaging Innovations 2022, it showcased a paper-based butter wrap with a grease-proof barrier coating applied to both sides of the paper.

Compared to traditional foil paper laminate used for almost all butter, the company calculates the carbon footprint of its paper-based solution at around 68% less.

“It’s a massive carbon footprint reduction,” says Hallsworth. “It’s by developing these sorts of products we think we’ll be able to reduce our carbon footprint.”

By Joshua Poole