Plastic packaging tax hike is another kick in the teeth for sustainable pallet suppliers

As the Managing Director of goplasticpallets.com, I feel compelled to share my thoughts on the Chancellor of the Exchequer’s Autumn Statement on Wednesday 22 November, which included a rise in the Plastic Packaging Tax (PPT). This tax, initially set at £200 per tonne, was increased to £210.82 per tonne on 1st April 2023, and will now see a further increase to £217.85 per tonne from 1st April 2024.

We at goplasticpallets.com had anticipated an increase, so the news does not come as a surprise. However, the necessity and impact of this tax hike does warrant a deeper discussion.

Is this the right time for a rise in Plastic Packaging Tax?

Firstly, it’s important to consider the existing financial impact of the PPT. The tax has already been generating significant revenue, raising questions about the need for further increases, especially given that thousands of companies have yet to register for it.

According to our Freedom of Information request, HMRC expected 20,000 manufacturers and importers of plastic packaging to register for PPT in its first year (2022/3). However, only 3,729 had registered by 31st March 2023. This stark difference between expectation and reality suggests either a substantial overestimation of the affected companies or a failure in enforcement and communication.

Despite the lower-than-expected registration figures (although I’m sure it has risen somewhat in the meantime), HMRC seems to be meeting its revenue targets, indicating that a disproportionately larger burden is being placed on fewer companies. For full transparency, in the first year of PPT, the annual cost to our business stood around the £250,000 mark. This is significantly above the average payment HMRC originally expected per company, highlighting an undue burden on businesses like ours.

Therefore, I believe that any hikes to the tax should be delayed until HMRC is confident that all businesses that should be registered for PPT are making payments.

Once again, the criteria MUST be reconsidered

As we fast approach the third year of PPT next spring, I’m sad to say that the current qualifying criteria still fails to distinguish between products that are inherently unsustainable and those that contribute positively to the circular economy, like our plastic pallets.

Plastic pallets are in no way similar to single-use items like sandwich wrappers or shrink wrap, which often end up in landfill. Instead, they are durable, reusable, and form a vital part of a sustainable logistics system. This is regardless of whether they are made from recycled plastic or virgin grade plastic, which the food manufacturing and pharmaceutical sectors heavily rely upon (see our hygienic pallet guide for more information).

Our plastic pallets are designed for longevity and multiple uses, significantly reducing the need for constant replacement and thereby diminishing overall waste. At the end of their long life cycle, these pallets can be fully recycled, embodying the principles of the circular economy. Taxing such products under the same umbrella as single-use plastics not only misrepresents their environmental impact but also unfairly penalises businesses that are actively contributing to a better, more sustainable future.

Therefore, it is imperative that the government revisits and revises the PPT criteria, recognising and incentivising products and practices that are aligned with environmental sustainability. Such a revision – especially in light of this latest rise in PPT – would not only create a fairer approach but would also encourage more businesses to invest in the right type of products.

Is the government’s environmental approach working?

It’s crucial to address the broader issue here: the government’s approach to tackling the use of single-use plastics, as well as recycling. While the PPT is a step in the right direction (when applied and managed fairly!) it is not enough. The government needs to work more closely with businesses committed to greening the logistics sector, like goplasticpallets.com.

Furthermore, it is incredibly frustrating to witness the continued sharp rise in PPT while other crucial measures, such as the Extended Producer Responsibility (EPR) scheme, are being delayed.

The recent increase in the PPT, while expected, brings to light the need for a more nuanced approach. The tax should not just be about raising revenue; it should drive change towards more sustainable practices.

As we move forward, I urge the government to reconsider its strategy. It’s not just about increasing the rate of a tax; it’s about fostering a collaborative environment where businesses and the government can work more closely together on this issue. We at goplasticpallets.com are more than willing to be part of this conversation and contribute to a greener, more sustainable future.

Jim Hardisty,
Managing Director