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Global Lessons from the UK's Plastic Packaging Tax

A roadmap for a sustainable future

According to the World Bank, solid waste production reached 2.24 billion tonnes in 2020, and is projected to surge by 73% to 3.88 billion tonnes by 2050.

Plastic is ubiquitous and troublesome—one-third of the world’s plastic is used in packaging. Plastic bags snag on trees, clamshell packaging jams garbage bins, straws, and drinks lids litter sidewalks. The Great Pacific Garbage Patch—mostly plastic and twice the size of Texas—floats between Hawaii and California.1 of the 6.3 billion tons of plastic waste produced over the last seven decades, only 9% has been recycled and another 12% incinerated.2 Given that only a small percentage of the plastic waste has ever been recycled or incinerated, the need for strategic action against plastic misuse has never been more crucial.

There is some good news: Initiatives aimed at reducing plastic waste are growing globally, with the United Nations Environmental Programme (UNEP) championing the movement. In May 2023 UNEP launched negotiations to develop a framework for addressing plastic waste, with the goal of reaching an agreement by 2025.3 Many countries are also enacting regulations that ban or tax plastic manufacturing, imports, or general use.

Yet varying regulations and timelines add a layer of complexity for multinational companies as tax teams seek to comply with new rules; take advantage of related incentives; and mitigate regulatory, financial, and reputational risk. This article examines the burgeoning plastic regulations and their implications on tax teams, using the UK’s Plastic Packaging Tax (PPT) as a representative example.

Plastic has been the default option in design for too long. It is time to redesign products to use less plastic, particularly unnecessary and problematic plastics, to redesign product packaging and shipping to use less plastic, to redesign systems and products for reuse and recyclability...

—Inger Andersen, Executive Director, UN Environment Programme

From the PPT: Lessons for Sustainable Practices

Since introducing a charge for single-use plastic bags in 2015, the UK government reports a 98% decrease in their use at major retailers.

Furthermore, the UK’s plastic packaging tax went into effect April 1, 2022, as part of an initiative that sets recycling targets for six types of packaging by 2030. The PPT requires manufacturers and importers to use at least 30% recycled plastic by weight, or pay a tax currently assessed at £210.82 per ton of plastic packaging.

Currently, the UK government is consulting on how to measure recycled content in chemically recycled packaging for the purposes of PPT. The consultation process is expected to conclude in October 2023.

Demonstrating compliance can be challenging, but there are several actions organizations and tax teams can take to smooth out the process. So, what can we learn from the plastic packaging tax initiative? We can glean several lessons:

Promote data transparency and clarify roles:

Businesses seeking to demonstrate compliance with PPT targets must decide who will document plastics use, design, and implement data collection processes, and collect and submit the results. While many organizations have a sustainability officer or tax lead dedicated to environmental issues, PPT’s specific data analysis and reporting requirements are likely to require a cross-functional effort from tax, procurement, logistics, and product design and manufacturing—including clarification of individual responsibilities and adoption of new work processes.

Rethink the entire product lifecycle and supply chain:

Because the PPT applies to imports, businesses must capture information on packaging from supply chain counterparties as well as UK-based operations—in many cases, working with suppliers to prioritize recyclability in product design and throughout the product lifecycle. This could mean redesigning both business models and manufacturing processes to reduce waste, boost recyclability, and promote overall resource efficiency.

Strategize on plastic use:

Complying with the PPT—and practicing true sustainability—takes more than supply chain optimization and data analysis. It takes a whole new mindset. This is particularly true in the UK, where updates to the Extended Producer Responsibility (EPR) Act will be phased in beginning in 2024. Businesses will pay the cost of collecting and recycling any packaging they use, eventually paying more for less sustainable packaging. The act is designed to encourage not just use of, but research into, materials that replace or dramatically reduce plastics use.

Regulations to reduce plastic use and increase recyclability are being adopted around the world. Many are grounded in broader producer responsibility, including bans on specific products. Others incorporate incentives for sustainable design and production. Some do both. And for tax teams, it’s becoming more challenging to track, understand, comply with, and use all the methods needed to mitigate risk.

Global Responses to Plastic Pollution: Implications for the Future

Around the world, many jurisdictions are passing regulations to curtail plastic use and promote recyclability. From the EU's innovative plastics initiatives to the Asia-Pacific's regional collaboration and Canada's ambitious Zero Plastic Waste Strategy, nations are stepping up to the challenge.

Since 2021, the amount of non-recycled plastic packaging waste generated by each member state has been one of the factors influencing their contributions to the European Union budget. To provide flexibility and spur compliance, each member state was allowed to choose how to finance the €0.80 per kilogram levy, with options including taxing plastics manufacturers and passing the costs to businesses and consumers. Spain’s PPT-like scheme went into effect January 1, 2023, taxing manufacturers €0.45 per kilogram of non-recycled plastic packaging. Italy followed with a similar tax, but suspended implementation until January 2024.

Beyond these efforts, the European Commission’s (EC) Strategy for Plastics in a Circular Economy aims to make all plastic packaging reusable or recyclable by 2030,⁴ and to require that all polyethylene terephthalate (PET) drinks bottles contain at least 25% recycled plastic by 2025—30% by 2030. In 2021, France banned single-use plastics in all bags and drinks containers; other countries are expected to follow. Spain has banned the use of plastic wrap for fruits and vegetables. Some countries, like Scotland, pair regulation with incentives such as deposit returns for drinks containers.

Asia-Pacific countries generate nearly 65% of the world’s mismanaged waste, an effect of the region’s rapid urbanization and underdeveloped waste management infrastructure.⁵ Overall, Association of Southeast Asian Nations (ASEAN) member states (AMS) collect less than half of the waste they generate, and recycle less than a quarter of plastic waste.⁶ Many ASEAN nations are islands or archipelagos, and marine plastics pollution poses a significant threat to both the environment and the tourism and fishing industries.

Almost all APAC nations are developing responses in line with their particular needs, and many reflect PPT provisions—bans on single-use plastics, EPR schemes, taxes on plastic or difficult-to-recycle packaging (India and South Korea), and mandatory charges for plastic bags (India, Japan, China).

China is unique in being both a major source of plastic waste (and until recently, a major plastics importer) and at the forefront of regulation. Its 2017 Law on the Prevention and Control of Environmental Pollution Caused by Solid Waste sent shock waves through the world waste management market with a total ban on 24 types of solid waste imports, including plastic waste, with steep fines for noncompliance. It also shifted plastic reduction and recycling efforts in several exporting countries into high gear. China has since banned manufacture, use, and import of single-use plastic items including bags, utensils, and straws, and use of plastic microbeads in cosmetics manufacturing.⁷

Throughout the region, plastics regulation is gaining momentum as both landfill space and patience run low. The 2021’s Regional Action Plan for Combating Marine Debris in the ASEAN Member States (RAP)⁸ prioritizes reducing plastic consumption, increasing recycling, and minimizing leakage of plastic waste to surrounding waters. World Bank grants provide significant support for plastic recycling efforts in individual countries and the region.⁹

Both Canada and the United States have frameworks for regulating and reducing plastic waste, but the Canadian approach is more advanced and comprehensive. Bounded by three oceans and home to numerous shipping waterways, Canada is a founding supporter of the Oceans Plastics Charter, which seeks to develop a legally binding treaty to end marine plastic pollution.¹⁰ A raft of 2022 regulations designed to curb plastic pollution includes an immediate ban on import and manufacture of six categories of single-use plastic—checkout bags, cutlery, food-service ware, ring carriers, stir sticks, and straws. Sale of these items will be banned as of December 1, 2023,¹¹ and export as of December 1, 2025.

These efforts are a part of Canada’s broad Zero Plastic Waste Strategy, which aims to collect at least 90% of recyclable plastic beverage bottles and ensure that plastic packaging contain at least 50% recycled content¹²—ambitious goals demanding collaboration across provinces, territories, diverse rural and urban populations, and industries. Draft regulations, expected by fall 2023, could include a registry designed to hold plastic producers accountable for their plastic waste.

The exact form that accountability will take is yet to be seen, but possibilities include fines and bars from government contracts. Less quantifiable is reputational harm incurred when customers and supply chain partners balk at working with organizations that fail to do their environmental share.

In contrast, the United States is playing catch-up. Eight US states, from California and Vermont, have banned single-use plastic or plastic bags; the majority have not.¹³ State taxes on plastic bag use are common, as are refunds on returned beverage containers; still, most states do neither. Federal action shows more promise: The Environmental Protection Agency (EPA) has proposed eliminating release of plastic and other waste from land-based sources into the environment by 2040.¹⁴ More specifically, the EPA identified three key objectives, all in line with the UK’s PPT and other countries’ approach:

  • Reduce pollution during plastic production.
  • Improve post-use materials management.
  • Prevent trash and micro/nano plastics from entering waterways*** and remove escaped trash from the environment.

Since 2021, the US has embraced multiple domestic and international efforts to fight plastic pollution, with separate initiatives led by the US Departments of Interior, Agriculture, and Energy. According to the US Department of State, the current administration supports strategies adopted as part of the 2022 United Nations Environmental Assembly.¹⁵

The effect of plastic on the environment and personal health is a growing concern, requiring global action, innovation, and communication. Individual countries and regions can make progress on their own, but lasting change demands a global approach that draws on lessons learned from discrete initiatives like the UK’s PPT. For corporate tax teams, that may require both broad and specific changes across the organization.

If a “plastics audit” isn’t already in the works, manufacturers, partners, and retailers should start now, mapping their plastics footprints across the value chain—a necessity for compliance with current and future regulation. Multinationals need granular, component-level information about internal and external operating models so that they can set improvement targets. To obtain this data, organizations can embed requests for packaging information into supplier procurement processes, and update internal systems to support accurate measurement, data capture, and reporting of plastic flows. Operators can also begin assessing plastic-free and reusable packaging options. In aggregate, these efforts will minimize the plastic footprint of each organization. By exploring plastic-free and reusable packaging options, organizations can contribute to a more sustainable world, thereby mitigating the environmental damage wrought by excessive plastic use. That's a major step toward healing our planet.

  1. Great Pacific Garbage Patch. The Ocean Cleanup. Accessed July 12, 2023.

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  2. The known unknowns of plastic pollutionThe Economist. March 3, 2018, accessed July 12, 2023.

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  3. What you need to know about the plastic treaty negotiations in Paris this week. United Nations Environmental Programme. May 29, 2023, accessed July 12, 2023.

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  4. Circular Economy Action Plan. European Union.

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  5. Leander von Kameke. Plastic waste in the Asia-Pacific region – statistics & facts. Statista. Feb. 1, 2023, accessed July 12, 2023.

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  6. Benoit Bosquet. Beyond borders: Collaborative solutions to plastic pollution in Southeast Asia. World Bank. June 4, 2023, accessed July 12, 2023.

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  7. China: Single-Use Plastic Straw and Bag Ban Takes Effect. US Library of Congress. March 23, 2021.

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  8. ASEAN Regional Action Plan for Combating Marine Debris in the ASEAN Member States (2021–2025) – ASEAN Main Portal.

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  9. Benoit Bosquet. Beyond borders: Collaborative solutions to plastic pollution in Southeast Asia. World Bank. June 4, 2023.

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  10. Ocean Plastics Charter. Ministry of Environment and Climate Change Canada.

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  11. Change is here: Canada’s ban on certain harmful single-use plastics starts to take effect this month. Environment and Climate Change Canada. News release. December 17, 2022. Note: For ring carriers and flexible straws, the phase-out date is June 1, 2024.

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  12. Zero Plastic Waste Strategy. Ministry of Environment and Climate Change Canada.

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  13. State Plastic Bag Legislation. National Conference of State Legislatures. Feb. 8, 2021, accessed July 19, 2023.

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  14. Biden-Harris Administration Announces Latest Steps to Reduce Plastic Pollution Nationwide. Environmental Protection Agency. Press Release. April 21, 2023, accessed July 19, 2023.

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  15. U.S. Actions to Address Plastic Pollution. US Department of State. Fact sheet. Feb. 28, 2022, accessed July 19, 2023.

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