MPs call for lower VAT on recycled products

UK policymakers are calling for lower VAT on products with recycled content, following the launch of a new report entitled ‘Circular economy: ending the throwaway society‘. Produced by the Environmental Audit Committee, the report also recommends longer warranty periods for consumer goods and a ban on food waste being sent to landfill, as part of a wider move towards creating a circular economy.

“We had throwaway economics in the past, but that disposable society simply isn’t sustainable in the 21st century,” said Environmental Audit Committee Chair, Joan Walley MP. “Less than half of the stuff we throw away each year is recycled and turned back into something useful.

“The good news is that with the right government support, we can stimulate UK manufacturing, create jobs, grow our GDP and reduce our environmental footprint,” she continued. “We have to create a more circular economy that rewards innovative businesses, values natural capital, and is resilient in the face of rising global resource prices.”

The report recommends that the government should take steps to reform tax and producer responsibility regulations to reward companies that design greener products. In particular, it suggests that lower VAT rates should be introduced based on the environmental impact or recycled content of products. Tax breaks should also be considered for businesses that repair goods or promote reuse.

This could in turn lower the retail price for a whole range of products made using recycled plastic, from clothing to plant pots to vacuum machines, coffee-makers and computers. Dell, for example, has just become the first computer manufacturer to launch a computer made partly of third-party certified ‘closed loop’ plastics.

“The Environment Audit Committee’s recommendation to lower VAT on products containing recycled content is great news for British shoppers and consumer goods companies trading in the UK,” says Nigel Hunton, MBA’s CEO. “Should it be adopted, it could also provide a significant boost to the UK’s recycling industry. We fully support the creation of policies designed to incentivise sustainable product design and create a flourishing recycling market in the UK.”

Nigel and our founder Mike Biddle presented MBA’s thoughts on the challenges and opportunities for plastics recycling in the UK to more than 100 stakeholders at Westminster in 2013. Mike highlighted the sustainable business model that could help the UK to become world leader in recycling plastic waste, while Nigel called on MPs to introduce zero VAT for companies selling products made from recycled materials.

“By treating waste in the UK as a resource, and recycling it in a cost effective, environmentally sound way, the country could attract jobs and investment, reduce its dependence on fossil fuels and forge a reputation as an innovator in waste treatment,” says Hunton.

In addition to lowering VAT rates for recycled products, another important step will be establishing eco-design standards to ensure products are easier to repair, upgrade or recycle. In tandem, the government should work with industry to set longer minimum warranty periods for consumer products, the report finds. Finally, it also recommends streamlining the UK’s area-by-area approach to recycling in order to boost performance in line with the EU plans to increase recycling rates to 70% by 2030.

To learn more about how MBA Polymers could work with your company to provide high quality recycled plastic for your products, please contact us.