UK firms are warning about price hikes due to a new packaging tax.
- The upcoming extended producer responsibility (EPR) scheme aims to fund recycling efforts.
- Costs are expected to shift from councils to businesses, impacting product prices.
- Soft drinks, beer, and small kitchen appliances are among the items likely to increase in price.
- The glass industry is negotiating feasible approaches to manage increased costs.
UK companies have expressed concerns regarding a new packaging tax that is set to raise the prices of several everyday items. This tax, known as the extended producer responsibility (EPR) scheme, is designed to fund recycling initiatives by transferring the cost of recycling from local councils to the companies that utilise packaging materials.
As reported by The Guardian, the implementation of this tax is projected to lead to increased prices for products such as soft drinks, beer, and small kitchen appliances like toasters and kettles. The Department for Environment, Food and Rural Affairs (Defra) has provided its initial estimates of the tax rates, which will see glass being charged at rates between £130 and £330 per tonne.
In a statement, Defra described the scheme as a ‘vital first step in cracking down on waste as we move towards a circular economy’, while acknowledging that the provided fees are merely preliminary estimates. They are in discussion with the glass industry to explore more feasible methods for calculating these costs.
Pev Manners, Managing Director of Belvoir Farm, mentioned to The Guardian that the anticipated cost imposed by the EPR would amount to £850,000 for their business next year, equivalent to the entirety of their profits. He explained, “At retail, we think the EPR will put between 18p and 25p on a 750ml bottle because the grocers will just see it as part of the cost, add their profit margin and then put VAT on top.”
Additionally, a joint letter from several industry groups, including the British Beer and Pub Association and the Campaign for Real Ale, estimates an increase of 3p to 7p per bottle for the 3.2 billion bottles of beer sold annually in the UK. This illustrates the broader economic impact of the EPR scheme on the beverage industry.
The upcoming packaging tax poses significant challenges to UK businesses, likely leading to noticeable price increases for consumers.
