With the EU's plan to impose a plastic tax on member states starting in 2021 as part of its economic recovery program, and the recent wave of international plastic reduction initiatives, such as the Global Plastics Pact, a growing international trend is emerging towards environmental taxes on plastic products or raw materials. Within this dynamic, recycled material certification, as an industry communication tool, can align with international policies, achieve tax savings, and play a crucial role in enhancing product competitiveness.
The origins of the plastic tax
In recent years, plastic reduction has been a key topic in international negotiations. Although the impact of COVID-19 has temporarily slowed progress, the issue of plastic restriction and reduction has returned to the forefront in the post-pandemic era. In particular, the Global Plastics Treaty, expected to be concluded in 2024 and legally binding on countries around the world, is expected to pose a new wave of challenges to the plastics industry.
In response to the impact of COVID-19 on global industries, the European Union launched the NextGeneration EU economic recovery plan in 2020, adding a new plastic tax as one of the key measures to increase the EU's overall budget, and it will be levied from 2021.
The tax is based on Eurostat data and is levied at a rate of €0.80 per kilogram on the total amount of non-recycled plastic packaging waste generated by member states in the previous year. It is expected to generate approximately €6 billion in tax revenue annually (Figure 1).
Figure 1：EU plastic tax rates
Current Status of International Plastic Taxes
The responses to the EU plastics tax, which will be implemented starting in 2021, have varied among EU member states, depending on their respective regulatory policies. Some countries have already implemented their own domestic taxation systems. This article examines the UK and Spain, which have already implemented these systems, and provides a comparative table in Table 1.
(1) United Kingdom
The UK will implement the Plastic Packaging Tax (PPT) in April 2022. This tax applies to plastic packaging produced in or imported into the UK that contains less than 30% recycled plastic content, to encourage the use of recycled plastic in plastic packaging. The UK levies a tax of £200.00 per ton, with the rate increasing annually. If a package contains multiple components, each component is assessed individually. The component with the highest plastic weight is subject to the tax, and the total weight of the components is charged. (For example, if a packaging component weighs 10g, comprising 6g of plastic and 4g of aluminum foil, the plastic is the largest component by weight, so that component is subject to the tax, and the total weight of the entire packaging component is 10g.) Furthermore, components containing at least 30% recycled plastic are exempt from the tax. Third-party verification of the recycled plastic content in a product is not mandatory, but production documentation must be submitted for review.
(2) Spain
In 2022, Spain issued "Law 7/2022 on waste and contaminated land for a circular economy," creating a new tax system to prevent the production of non-reusable plastic packaging, which took effect in January 2023. Spain levies a fee of €0.45/kg on the "plastic content of non-reusable packaging." Even if plastic is not the primary component of the packaging, packaging that meets the definition of non-reusable packaging in the regulation is subject to the fee based on the weight of the plastic in the packaging. Furthermore, the use of recycled plastic is tax-exempt. Manufacturers will be able to declare the percentage of recycled plastic used in their products starting in 2023, but will be required to provide a third-party verification certificate as evidence of the tax exemption starting in 2024.
Table 1: Comparison of plastic tax regulations in the UK and Spain
Adding recycled plastic to products is an international trend
According to the plastic tax policies of various countries, it can be found that the use of recycled materials in products is a common tax exemption condition, and it can often obtain preferential treatment or exemptions in international policies. As the management system gradually matures, we can also expect that the requirement to add recycled plastic materials to products will gradually become mandatory from encouragement.
Therefore, it's recommended to conduct early testing of the proportion of recycled materials added to products and identify stable recycled material suppliers. Considering that third-party verification of the proportion of recycled plastic materials in products and their traceability has become an international consensus, it's also recommended to establish relevant production traceability documentation capabilities as soon as possible to enhance industry competitiveness.
References:
1. Recovery plan for Europe – European Commission (europa.eu)
2. https://kpmg.com/xx/en/home/insights/2021/09/plastic-tax.html
3. https://www.roedl.com/insights/plastic-tax/
4. wtsglobal-plastic-taxation-in-europe-2023.pdf
Author: Wang Tingxuan, Consultant, Sustainability Strategy Group, Quality, Environment and Safety Department, Plastics Industry Technology Development Center
