Labour’s new stealth tax on packaging will raise £2bn - but consumers are the ones footing the bill, writes Iain Dale
The new tax on packaging will raise £2 billion a year for the Exchequer, but it will be us, the poor consumer, who will pay.
West Ham deserved to go down. Consumers do not deserve what comes next: a £2bn packaging levy that firms will pass on, shoppers will pay and ministers will find increasingly hard to justify.
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I could spend the next 500 words bemoaning the fact that West Ham have been relegated, and wallowing in a cesspit of self-pity. The fact is that we deserved to be. We got the third lowest number of points, and statistics don’t lie. There are all sorts of reasons for that, but I’ll leave all that to be discussed on my WestHamTillIDie blog.
As you know, I like to keep tabs on what is going on in our government and our politics, but reading the Sunday Times Business section this morning made me sit up with a jolt. Are you aware that the government is rolling out a new tax on – wait for it – packaging, called the Packaging Extended Producer Responsibility scheme (EPR)? No, me neither.
It will raise £2 billion a year for the Exchequer, and it will be us, the poor bloody consumer, who will pay. It’s the ultimate stealth tax because inevitably manufacturers will pass the cost on to the retailer, who, in turn, will pass it on to us. It is estimated that it will add 0.5% onto inflation. Packaging prices will rise by 15% for plastics and 19% for glass and other forms. The money raised will be distributed to local authorities, who will be free to spend it on what they like. It will not be hypothecated.
I suppose you could make a case for a tax on packaging if it could be proved that it would lead to less packaging being used and more recycled, but this is far from the case.
Before I have a rant at the Labour government, let’s be clear that this was first introduced by the Conservatives in 2023, but only started to be implemented (by Labour) last year. It is in the middle of being fully rolled out now, despite pleas from businesses for the Labour government to think again before it adds to their costs, and to the cost of our weekly shop.
Emma Reynolds, the Environment Secretary, has point-blank refused. Companies in the packaging sector have already started to halt any further investment in this country, seeing this as the last straw. Encirc, a company employing 2,000 people and manufacturing glass products, has £500 million ready to invest, but says it is now looking to invest it elsewhere, so long as the EPR tax regime remains in place.
The glass sector makes up only 5 per cent of the packaging market, but pays 27 per cent of the total tax revenue because the tax is ludicrously based on weight. Supermarkets claim that the hit to their bottom line will be around one-fifth. And for what?
So next time you hear a Labour politician rail against price increases and shed crocodile tears about the way the cost of living is hitting consumers, I trust you will tell them they’re talking hypocritical horses**t. And let’s not forget the last two Conservative DEFRA secretaries of state either – Therese Coffey and Steve Barclay. They kicked this off.
How on earth they felt this tax could be sold as remotely Conservative, the Lord only knows.
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Iain Dale is on LBC 7-10m Monday to Thursday.
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