Plastics Tax consultation extended due to Covid-19

The consultation period for the Plastic Packaging Tax has been extended by three months due to the disruption caused by the Covid-19 pandemic.

Announced yesterday (28 April), the consultation period, which was originally set to end on 20 May 2020, has now been extended to 20 August 2020.

Chancellor Rishi Sunak confirmed in the Spring Budget that the Plastic Packaging Tax, originally announced in the 2018 Autumn Statement, would be introduced from April 2022 at a rate of £200 per tonne for all domestically-manufactured or imported packaging containing less than 30 per cent recycled content

Plastics Tax consultation extended due to Covid-19In a statement announcing the extension, HM Revenue and Customs said: “This consultation was published on 11 March and was due to close on 20 May. We are grateful for the responses we have already received.

“The government recognises that many sectors with an interest in this policy are affected by Covid-19. We want to give all stakeholders time to submit their views, so we have extended the consultation. The closing date is now 20 August 2020 (11.45pm).

“However, we encourage early responses from stakeholders, where possible, to support our ongoing consideration of this policy.”

The consultation provides more information on the proposed tax, described as a “game-changer” that would “unlock the crucial investment in recycling infrastructure” in the UK by the resources and waste industry, and asks for views on tax design as it is further refined before its April 2022 introduction date.

The tax has generated great public and industry support since the idea was first proposed, with the first consultation run by HM Treasury on the topic attracting an unprecedented 162,000 responses, the largest response to any consultation in the Treasury’s history.

Despite the extension to the consultation deadline, there has so far been no indication that the government is considering a delay to the implementation of the tax.

Chair of the Tax Professionals Forum and EY Head of Tax Policy Chris Sanger said: "Acting now to extend the deadlines for consultation is a welcome decision, as these consultations cover important issues that taxpayers need time to consider. Given the current environment, attention will naturally and rightly be focused elsewhere.

"An extra three months should allow sufficient time for engagement, whilst still enabling the government to deliver important tax policy changes within the current fiscal timetable."

Need to take stock

The resources and waste industry has welcomed the extension while urging the government to use the additional time to take all factors into consideration to ensure the best possible design of the tax.

Commenting on the consultation extension, Executive Director of the Environmental Services Association (ESA) Jacob Hayler said: “An extension to this consultation is the only sensible approach bearing in mind that many of the most valuable voices are currently engaged in delivering essential services to society under challenging circumstances.

"There is no indication at present that the implementation of this tax is going to be extended and it is vital that it continues to its original timetable, but the additional time should help to ensure that it a range of factors are considered in its design.

"It is essential that this tax is carefully designed to avoid unintended consequences and ensure that it meets its objectives of boosting demand for recycled plastics; limiting the UK’s reliance on volatile recycling export markets; and stimulating the domestic reprocessing sector. Following the announcement in the budget earlier this year, we have already seen the potential power of this tax in increased demand for recycled plastic and new investment in infrastructure.”

Robbie Staniforth, Head of Policy at compliance company Ecosurety, said: "It is sensible to give stakeholders more time to consider the proposals outlined, given the current situation. This tax measure needs to be carefully designed to ensure it works as intended. From our analysis so far, there are still many issues to be ironed out.

“The extension does not necessarily mean a delay to implementation. We hope the extra time for reflection will be utilised by stakeholders to improve the tax so it is truly world-leading when it commences in April 2022."

Phil Conran, Director of 360 Environmental and Chair of the Advisory Committee on Packaging (ACP), added: “This is no great surprise and there has been no announcement of any delay in its introduction. It is good that the government has recognised the need for more time, but given the change in the general dynamics of the plastics industry – the dramatic fall in oil prices, widespread shut downs of recycling facilities and the surge in demand for single-use plastics for healthcare reasons – there is a need to take stock of the wider implications to ensure that what was relevant before the coronavirus crisis will still be as relevant in the future.”

You can check the status of tax policy consultations on the government website and you can respond to the Plastic Packaging Tax consultation on the dedicated consultation page.

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