Packaging tax to push up prices for consumers - London Business News | Londonlovesbusiness.com

"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. 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."

"In addition to the financial impact, 85% of retailers said the administrative and compliance burden they face has increased significantly as a result of EPR. Firms are now required to report extensive information on the composition and amounts of packaging they are putting on the market. This creates further pressure on businesses already grappling with rising costs and a heavy regulatory burden."

The Extended Producer Responsibility (EPR) packaging tax came into effect at the start of the month and is expected to shift over 80% of its costs onto consumers. The scheme levies fees on companies producing packaging bought and disposed of by households, with charges based on materials and amounts used. Retailers faced around £5 billion in extra employment costs last year from higher employer National Insurance and rising National Living Wages, limiting capacity to absorb further costs. The Bank of England estimates EPR will add 0.5% to food inflation. Eighty-five percent of retailers report significantly increased administrative and compliance burdens due to extensive reporting requirements. Retailers plan to increase sustainable packaging and reduce packaging volumes while seeking clearer government guidance on consumer and environmental outcomes.

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