Plastic Packaging Tax on Imports: HMRC Enforcement

Steven Bonnar Excerpts

Tuesday 17th October 2023 Westminster Hall

[Steven Bonnar (Coatbridge, Chryston and Bellshill) (SNP)]

It is a pleasure to see you in the Chair this evening, Mr Davies. I thank the hon. Member for Amber Valley (Nigel Mills) for securing and leading this important debate. The focus of all Members across the Chamber should be on ensuring that the implementation of the plastic packaging tax aligns with our shared goal of reducing the quantity of virgin, non-recycled plastic in use in the United Kingdom by guaranteeing that importers will face the same tax rates as domestic producers.

It is an undeniable fact that PPT is a valuable tool in encouraging firms into a transition away from virgin plastics; I think we are all agreed on that. However, data released by HMRC in August reveals a stark discrepancy. Yes, it is indeed early days for the tax, as the hon. Member for Amber Valley said; however, although it was estimated that 20,000 businesses across various sectors would be affected by the PPT, only 4,142 had actually registered to pay by 8 August 2023. That is one fifth of the total expected. That raises a vital question: what has gone wrong with the roll-out of this scheme? We look forward to the Minister informing us of that.

Industry leaders have expressed the concern that many of us feel that certain countries’ businesses are exempt from paying PPT. Of course, that is just one concern, but it is one that creates a risk of importers undercutting our domestically produced goods and undermining the competitiveness of our home-grown industries. We must ensure that PPT is levied fairly, and make sure that tax is paid on all imported products without exception. The UK Government must address these concerns and provide industry leaders with the assurances that they clearly seek.

Furthermore, PPT is failing to encourage firms effectively to reduce their plastic usage, primarily due to the gaps that we find in the regulations. Firms are using recycled plastics created through chemical recycling, which is a process that poses serious environmental and pollution challenges to the Government. We cannot afford to overlook the carbon-intensive nature of this process either. Plastics created through chemical recycling should not be exempt from taxation.

Although the threshold of 30% recycled material is a positive step, we believe that it is unambitious when compared to the European Commission’s approach, which levies a uniform 80 cents per kilogram for non-recycled plastic. Perhaps, to drive a substantial transition towards 100% recyclable materials, we should consider increasing the threshold. I look forward to hearing the Minister’s views about that.

We know that PPT raised £276 million in the financial year 2022-23. However, although that revenue is welcome, it is imperative that we reinvest it in increasing the supply of recycled packaging alternatives that are available to consumers. Of course, the tax is designed to provide an economic incentive for businesses to use recycled plastics and we must ensure that the revenue generated by it supports that primary goal. The lack of supply of packaging materials is hindering the transition away from virgin plastics, so we must reinvest in creating high-value jobs, increasing wealth and reducing the amount of plastic sent to incineration, or indeed landfill.

We cannot ignore the substantial concerns surrounding PPT and its effectiveness in achieving its intended purposes. We must address the issues with the scheme’s roll-out, ensure that there is fairness in taxation for imports, eliminate exemptions for chemical- recycled plastics and raise the threshold to encourage greater use of recycled materials. It is our collective responsibility to safeguard our environment and economy through smart and effective policies.