The EU set to introduce £800 a tonne plastic levy
20th October 2020
The European Union is to introduce a levy on all non-recyclable plastic packaging waste handled by its member states from 1 January 2021. The levy will be €0.80 per kilogram (€800 a tonne) and funds will be payable directly into the EU budget, rather than going to the governments which collect them.
The levy was confirmed as part of the EU’s €750bn Coronavirus Recovery Strategy and will be applied for products “with a mechanism to avoid excessively regressive impact on national contributions.”
The policy is set centrally for EU member states, so individual countries would pay their contribution into the budget at the “call rate” of €0.80 per kilogram, with each member state then deciding how to gather these funds internally (i.e. through general taxation or separate legislation). The methods used to meet the cost of the charge will be up to individual countries, and the EU Council has not proposed any regulatory provisions around this. Individual countries are free to adopt different approaches and could seek to recover the cost of meeting the charge from various parts of the supply chain, leading to potential regulatory divergence. The key uncertainty remaining for the plastic and recycling markets is how member states will incorporate this into national legislation.
All levies generated will go into the central EU budget, with no plans to ring-fence the monies for the waste and recycling industry. With the levy potentially generating €6bn-8bn annually between 2021-2027, it does present an assured fund-raising exercise for the coronavirus recovery programme, however, many are concerned about the impact this will have on the plastics manufacture and recycling industries.
Impact on the UK
The UK is currently consulting on its own Plastic Packaging Tax which will be charged at a rate of £200 per tonne on the production and import of plastic packaging with less than 30% recycled content. The EU levy though, is aimed at unrecyclable plastic, rather than minimum content regulations.
Scheduled for introduction in April 2022, the UK Plastic Packaging Tax will be unaffected by this commitment from the EU. Furthermore, with the UK having left the EU and yet to agree a deal, it is unclear what impact the introduction of this levy will have.
As a non-member state, the levy may well not apply to the UK, however, it is likely that where EU member states/businesses are paying the levy on imported goods from the UK, they will seek to offset their costs on their suppliers.
Is Something Better Than Nothing?
German environmental group Deutsche Umwelthilfe (DUH) said the tax was long overdue and “too timid” but something to be happy about nonetheless. However, there have been concerns that the bill does nothing to address waste collection infrastructure shortages, and that the short timescale to implementation does not allow member states enough time to enact the legislation in a considered manner. Agree or disagree? We hope to keep you updated in this area over the coming months.