As the Plastic Packaging Tax rate is set to increase from 1 April, marking two years since it was first introduced in the UK, Southgate Global, a leader in the supply of packaging equipment, consumables and servicing in operational logistics and fulfilment, explores the impact that increase will have on the market.
Originally introduced in 2022, in its first year alone the PPT tax raised over £40m more than expected, bringing in £276m compared to the £233m predicted[1]. This has since sparked concern that the tax is not high enough to encourage a real change in plastic use by businesses and as a result, the government might not meet its recycling targets.
This April sees the rate increase again in line with the Consumer Price Index, from an original £200 per tonne to £217.85 per tonne.
Reflecting on the impact of the PPT so far, Gavin Gill, Head of Compliance at Southgate Global, said: “The tax was introduced with hopes to stimulate the market for recycled material and encourage the inclusion of recycled content. Yet with the cost of such materials so high now, a lot of businesses have just decided to take the hit and pay the tax instead.
“As we see the rate rise again, it may become more of a push for companies to get hold of recycled content, but what we also might start to see is those looking for alternative sustainable solutions.”
Gill explained that going through the process of the PPT is a strain for a lot of businesses, especially those operating on a smaller scale. The tax requires significant administrative requirements, having to gather more detailed data on the plastic packaging used. Then there are the ongoing costs of compiling, filing and paying tax returns, keeping appropriate records and amending returns.
He added: “Customers often turn to us looking for answers on how to reduce their time, speed up operations and reduce costs, all while meeting sustainable targets. Our advice is to consider alternatives to plastic where you can. This isn’t always the answer, but there are simple switches you can make.”
Gill used the example of void fill and replacing plastic chips with your own cardboard waste by recycling on-site, reducing the need to source raw materials or natural resources from elsewhere.
He added: “Using a Shredder is a prime example of how to apply this ‘switching’ approach, allowing you to re-purpose waste materials on-site to create high-bulk void fill. One switch here has multiple benefits – not only are you saving costs on sourcing new materials and reducing the strain on natural resources, but you’re also saving on external waste disposal and reducing carbon on transporting waste.”
Shredding cardboard for void fill is a popular practice which Southgate predicts to become even more so as the rate of the PPT continues to increase, as it boasts a 360 lifecycle of cardboard all maintained on site.
Southgate’s Optimax Shredding Range prides itself on offering the lowest price amongst other brands without compromising on quality, accommodating a range of cardboard thickness with a high output speed and rapid feeding capability.
“Quite often customers look to make big switches in attempts to be more sustainable and then they often find they have to compromise on their ambitions, resulting in reduced environmental benefits and postponed targets. As we continue into 2024 and beyond, we predict we’ll see more businesses focusing on every element of operations to meet environmental targets and, at Southgate, we’ll be there to support and guide them bringing innovation into the market and looking to find switching options that help them to meet their ESG goals in practical, low cost, high impact initiatives.”
Serving over 3,000 customers in more than 20 countries around the world Southgate has a range of operational logistics and fulfilment solutions that support some of the biggest organisations in the key sectors including 3PL, e-commerce, retail, post & parcel and general manufacturing.
For more information on Southgate’s Optimax Shredding Range, click here.
[1] https://www.endsreport.com/article/1823791/plastic-packaging-tax-exceeds-revenue-projections-first-10-months