New tax to directly increase cost of food in the UK from this week
New figures from the British Retail Consortium (BRC) show that over 80% of the costs of the new packaging tax – the Extended Producer Responsibility (EPR) scheme – is set to be passed onto already hard-pressed consumers.
The new tax, which came into effect this week, is levied on any company that produces packaging bought and disposed of by households, including retailers and brands. The fees are based on the materials and amounts used.
“Following last year’s Budget, where retailers were hit with £5 billion in extra employment costs due to higher employer National Insurance and rising National Living Wages, the industry has been left with little room to absorb additional costs,” the BRC said.
“With EPR set to cost industry billions, this new tax will be yet another inflationary pressure, at a time when food prices are already rising fast, with The Bank of England estimating that the policy alone will add 0.5% to food inflation.”
With prices set to increase as a result of the new tax, the government must provide greater clarity on how consumers and the environment will benefit, the group said.
The BRC are calling on the government to put in place legal restrictions (ringfencing) to ensure the money raised from EPR can only be used by local councils to collect and operate local recycling, as well as fund improvements to local recycling systems.
“Retailers support the polluter pays principle and are making significant changes to reduce and improve their packaging. But the packaging tax is also a multi-billion pound levy being paid by consumers during a cost-of-living crisis,” said Andrew Opie (Director of Food & Sustainability at the BRC).
“They will ask: what are we getting for higher prices? Unless funds are spent transparently and effectively, EPR threatens to just be another burden on an already overtaxed industry with no tangible benefits for customers or the environment.”
