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Packaging tax levy gets cool reception

Proposals for packaging levy to boost recycling are unnecessary and inappropriate, industry operators have claimed.

The proposals which were among a range of “green taxes” outlined in a report from the Environmental Services Association (ESA), who suggested a packaging levyacross a range of materials to promote greater recycling and raise £70m.

The report said the tax could operate alongside the PRN system and would prevent 570,000 tonnes of packaging waste. The levy would do this by acting as a price floor under PRN revenues to provide greater certainty for investment in packaging recycling and recovery infrastructure. The ESA said the price floor would also provide a strong incentive to obligated businesses to exceed their targets, rather than just meet them, as the PRN system has done.

But recyclers and industry bodies were critical of the plans.

Dick Searle, chief executive of the Packaging Federation, said that the tax was not needed.

“We already have a levy on packaging materials, it’s called the PRN system,” he said. “Recycling shouldn’t be driven by taxation but by value.”

Andy Doran, sustainability and recycling development manager at metal recycler Novelis said that a levy was unlikely to have the results suggested by the ESA.

“We don’t think the PRN system is perfect but a blanket tax doesn’t make up for the current failings,” he said. “There are taxes and similar blanket charges in other places in Europe but they generally don’t end up putting value back where you want it, it just ends up going to the treasury for other things.”

Tim Gent, director of glass recycler Recresco, said that there were distinct advantages to the PRN system working independently, and also expressed concern that a tax would not distribute benefits as evenly as the PRN system by itself.

“The benefit of the PRN system when we get high prices is that it filters back right the way down the line to the grass roots level, so that small operators benefit,” he said.

“A levy would essentially be a Green Dot system, and the concern is how the money would get distributed,” he said. “The PRN system has been a little neglected but if it is more ambitious and stamps out fraud it should be more efficient. When it does work properly is very transparent. However, it’s good the ESA’s proposals are forcing us to look at the shortcomings of the PRN system.”

A spokesperson from the Treasury said: “This year the Government announced challenging new recycling targets above EU levels as part of the Producer Responsibility System. These targets will incentivise recycling infrastructure and capacity investment in the long run and will reduce packaging waste. We welcome new ideas from the industry and take them into consideration. However the overall approach we take to taxing this industry also needs to reflect burden imposed on businesses.”

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