Proposals to introduce a Plastic Bag Levy in Northern Ireland
February 2010
Introduction
The Northern Ireland Independent Retail Trade Association has over a 1300 members from the independent retail grocery and food sector in Northern Ireland who generate in excess of £3 billion turnover every year and employ over 30,000 staff.
NIIRTA welcomes the opportunity to contribute to this review – as it will have a direct impact on the majority of members, and consequently suppliers and those employed – and have actively encouraged members to complete the on-line questionnaire on an individual basis to ensure this source of statistics is fully representative.
Northern Ireland is a small business economy with 98% of all business classified as ‘small’. The independent retail sector is the biggest sub-sector of that economy and plays a crucial role as the backbone of the private sector.
Northern Ireland Executive Draft Budget
NIIRTA is encouraged that the Northern Ireland Executive has recognised the value of the independent retail sector to the local economy. However it must ensure that its decisions are consistent with its declared goals and objectives – and the Draft Budget will largely determine how it intends to help or hinder those businesses who are focused on the indigenous market and provide a service to all those in the community.
NIIRTA understands that the Executive faces many challenges in the months and years ahead – both in terms of meeting its environmental obligations and generating the necessary levels of revenue to match its spending plans.
The maturity to identify new revenue streams will be important in demonstrating it has the capability to manage the local economy effectively.
NIIRTA has analysed the spending plans set out in the budget proposals and sought the view of its members. The issue of a new Plastic Bag levy has emerged as an issue of particular concern.
The principle concern expressed by shopkeepers and suppliers is to how is intended to be administered. Already small businesses face an increasing administrative burden, as well as steadily rising costs in particular relating to energy and rates. As a consequence value is steadily being eroded from the independent retail sector.
It is of concern that there seems to be little clarity available from local government departments in respect to this question. This would seem to indicate therefore that this measure has been included with little thought or analysis of commercial implications and instead fulfilling political rather than economic demands.
There are many who query the projected revenue figure of £13million being achievable, and NIIRTA will be seeking a much more detailed analysis of how this figure was reached by the Department of Finance and Personnel in the near future. It is of our opinion that there is no realistic basis for such a figure.
NIIRTA understands the need to offer solutions as well as criticism. Therefore it proposes that should such a levy be implemented, the applicability of those eligible be calculated on the square footage of their business.
Whilst the precise figure would need to be determined - an estimated figure of approximately 20,000 square feet could be deemed as reasonable - it should encompass those large businesses whom are responsible for the vast majority of plastic bags in circulation, and who have sufficient financial, staff and logistical resources to manage such a scheme.
A Working Model – the Voluntary Approach
Previously, NIIRTA have been signatories to a Joint Statement on Reducing the Environmental Impact of Carrier Bags.
A broad range of those in the UK Retail sector agreed to take action and set itself a shared objective with the government and WRAP to reduce the environmental impact of carrier bags by;
· reducing the environmental impact of each individual carrier bag
· encouraging customers to significantly reduce the number of carrier bags they use
· enabling the recycling of more carrier bags where appropriate
Other signatories included ASDA, Boots Group plc, Marks & Spencer, Tesco, Federation of Small Businesses Scotland, Scottish Grocers Federation, Association of Convenience Stores, British Retail Consortium and Primark Stores Ltd
In becoming a signatory to this statement, retailers agreed;
· to work jointly with government and WRAP (the Waste and Resources Action Programme) to monitor the environmental impact of carrier bags and to agree a baseline figure from which to measure reduction
· to work with the above parties to reduce the overall environmental impact by 25% by the end of 2008
· to review experiences by the end of 2008 in order to determine what would be required in order to make a further reduction by 2010
This voluntary approach encourages businesses to meet their environmental responsibilities whilst operating in the most efficient fashion.
Republic of Ireland
A plastic bag levy was introduced in March 2002, a levy, officially designated as an ‘Environmental Levy’ and applied to the supply of plastic shopping bags by retailers.
The law requires that the levy be passed on to customers.
The levy does not apply to;
Small bags (recognised as one smaller than 225mm wide, 345mm deep, and 450mm long including handles) used solely to contain any of the following, whether packaged or not:
· Fresh fish and fresh fish products
· Fresh meat and fresh meat products
· Fresh poultry and fresh poultry products
· Small bags used solely to contain unpackaged:
· Fruit, nuts, or vegetables
· Confectionery
· Dairy products
· Cooked food, whether cold or hot
· Ice
· Bags supplied on board an aircraft or ship
· Bags supplied airside in an airport or in the passenger-only area of a port, for the purpose of carrying the goods on board an aeroplane or ship
· Bags sold for 70 cent or more
A Scottish Government note[1] highlights ‘In the first year of operation, the scheme raised some €10-12 million (£7-8 million), which was substantially less than anticipated’. This report also indicates a number of positive factors which have accompanied the introduction of the Bag Tax although since this was published feedback from colleagues in the Republic of Ireland indicates they are not satisfied with this tax – and indeed the increase in use of paper bags and bin liners cancelled out any benefits of reduced plastic bag use.
In the American Franklin report [ARA][2], paper bags are also shown to be the least environmentally preferable option. This was due to the greater amount of resources (materials and fuels for transport from greater weight per bag) that they require. Compared with lightweight plastic bags, paper bags:
· Use six times as much raw materials
· Use three times the energy for manufacture
· Are six times heavier for the same volume
· Use ten times the storage/warehousing volume
· Require seven times the amount of transport and associated emissions
Wales
The independent retail sector in Wales adopted a negative position in regard to the introduction of a similar tax in 2009[3] - with the Association of Convenience Stores highlighting ‘the negative impact on impulse purchasing, an increase in shop theft and high administration costs’.
NIIRTA has been monitoring the ongoing progress of legislation in Wales in relation to this issue, in particular the responses collated[4]. SME respondents have called for a ‘small business exemption’ and it remains to be seen if this will be considered.
http://wales.gov.uk/docs/desh/consultation/091111carrierbagresponsesen.pdf
Plastic bin liners
Fiona Moriarty, director of the Scottish retail Consortium (SRC), believes that the experience in the Republic of Ireland has demonstrated that a tax on plastic bags has unintended consequences.
"Consumer demand for paper bags in high street stores has led to severe environmental costs in terms of transport and fuel usage as they take up ten times the storage volume of plastic bags," she said.
"A major retailer in Eire reported an increase in sales of plastic bin liners of 70 per cent and others reported increases of 20 per cent in sales of black bin bags, as plastic bags were less readily available for re-use."
A Republic of Ireland plastic bag manufacturer was quoted as reporting "When Ireland introduced a tax on plastic bags sales went down by 90 per cent, but sales of plastic bin-liners went up by 77 per cent."[5]
Conclusion
NIIRTA members are amongst the most innovative in the small business sector, particularly in the area of environmental solutions. Therefore the Executive should and must work closely as it seeks to take this issue forward.
The current voluntary approach is proven to work, and have the support of most political representatives. They understand that the key to success is to educate customers to behave more responsibility rather than impose what is a further tax measure.
Ultimately it will be the consumer who will bear the cost of this proposal. Given the VAT and fuel rises recently such an additional cost could not come at a worse time for many families, particularly those on low incomes.
In contrast, as part of a new coalition of Northern Ireland’s leading business organisations, NIIRTA has participated in constructing a ‘Jobs Plan’ designed to reinvigorate the local economy. Underpinning this work, the Executive must ensure that it does not introduce measures which damage business confidence.
The introduction of environmentally friendly and business friendly legislation does not need to be mutually exclusive – however, it must also be recognised that businesses cannot go on having more and more placed upon them.
NIIRTA will welcome the opportunity to further discuss this matter with the Minister and his officials in the very near future.
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[1] http://www.scotland.gov.uk/Publications/2005/08/1993259/33019
[2] http://www.scotland.gov.uk/Publications/2005/08/1993259/33039
[3] http://www.talkingretail.com/news/independent-news/convenience-retailers-oppose-welsh-carrier- bag-tax
[4] http://wales.gov.uk/docs/desh/consultation/101022wastecarriersummaryen.pdf
[5] http://www.telegraph.co.uk/earth/earthcomment/3316094/The-plastic-bag-debate.html