Use taxes now to support green policy

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AAT has increasingly sought to play a role in framing the debate around environmental taxes, not simply because of the importance of getting this right for future generations but because it matters to AAT members and their clients now.

 In September 2019, AAT surveyed its Members’ Assembly and Council members, as well as AAT Licensed Accountants, on the issue of reaching net zero by 2050. The results revealed that 100% of AAT Council and Assembly members think this is important, as do 88% of AAT Licensed Accountants. There are very few issues that can achieve such high levels of agreement and it is this knowledge that drives us to have an impact where it’s needed most.

Plastic Packaging Tax

This is a new tax that applies to plastic packaging produced in, or imported into, the UK that contains less than 30% recycled plastic.

This tax provides a clear economic incentive for businesses to use recycled material in the production of plastic packaging and in the words of government, will, “create greater demand for this material and in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.”

AAT has responded to several consultations on the Plastic Packaging Tax and worked with environmental charities on the same. Indeed our work on this was hailed during a debate in the House of Lords in 2018. AAT has always backed the Plastic Packaging Tax because it could play a very significant role in reducing plastic waste, positively changing producers’ behaviour and ultimately benefit all consumers, the environment and economy.

However, there are a number of improvements that could still be made, especially around increasing the plastic content threshold above the 30% level to at least 40% with further increases in the years ahead as part of a roadmap for action.

Deposit Return Scheme

According to the government, UK consumers go through an estimated 14 billion plastic drinks bottles, nine billion drinks cans and five billion glass bottles a year.

 Recycling rates are far short of where they should be and cans and bottles form a huge litter problem. AAT has long supported government plans to introduce a Deposit Return Scheme (DRS).

Again, DRS still has some issues to be ironed out. Crucially, the rate at which the deposit is set. Some years ago AAT stated that a 20p deposit did not appear unreasonable and would likely reduce litter and increase recycling rates. This has subsequently been set as the rate in Scotland so there is already a precedent in very close proximity.

AAT also quickly realised that a DRS scheme could have a significant impact on small newsagents and the like due to a lack of storage space and similarly if significant numbers of cans and bottles are returned, this could potentially affect the running of their business. However, it could also lead to increased business through increased footfall and the handling fee would represent an extra revenue stream. 

AAT therefore recommended a potential solution to the need to balance these competing issues –  granting an exemption if the small store can demonstrate that an alternative collection point is available within a certain short distance of their store, say 400 metres. Not a panacea but a reasonable, practical compromise.

There are various other areas of environmental tax policy on which AAT is providing politicians and civil servants with analysis and advice. For more information or to let us know your views, please don’t hesitate to get in touch at [email protected].

Phil Hall is AAT's Head of Public Affairs and Public Policy.

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