Concerns over supermarket tax raid as drinks face price hike of up to 18p per bottle | UK | Travel

A tax hike could cause shopping bills to skyrocket and alcohol prices to increase by as much as 18p per bottle. A multi-billion recycling levy, which taxes organisations for the packaging they supply or import into the UK, is expected to cost the sector around £2 billion and be passed onto consumers.

The Food and Drink Federation estimates the EPR (extended producer responsibility) tax will add 12p to a bottle of wine, 6p to a bottle of beer, and 18p per bottle of spirits. EPR intends to lower the amount of unsustainable packaging. But supermarkets have said it could match national insurance contribution hikes without improving the use of sustainable packaging. The levy taxes products according to weight, so even though the base rate for glass is lower, less sustainable plastic packaging could actually face the lowest cost.

The Bank of England’s economy health check stated that many businesses “expect the impact of the EPR could be similar to that of the increases in employer NICs”.

The British Retail Consortium (BRC) estimates it will add £2 billion in costs across the sector, compared with an estimated £2.33 billion for national insurance contribution increases.

Marks and Spencer predicts a £40 million EPR bill. Its chief executive, Stuart Machin, claimed last month it would be “20 times the current amount with £2bn going straight to the Treasury as general taxation and no improvement to recycling”.

One supermarket boss added: “The current proposals treat it as a way of funding councils, many of whom have completely inadequate facilities for handling waste packaging.”

Andrew Opie at the BRC has concerns the tax will not be spent on improving recycling.

He said: “The money is not ring-fenced in local authority budgets, which means when the Government passes this money over from retailers to local authorities, it doesn’t have to sit in a budget which says this must be used for recycling.

“Knowing where local authorities are with their budgets at the moment, it’s perfectly feasible to think that they will spend this on things other than recycling.”

In November 2024, retailers wrote to Rachel Reeves calling to push back the EPR, with its previous 2024 launch date having already been delayed once.