(Bloomberg) -- A Bank of England survey found that upcoming recycling regulations will cost some companies as much as Labour’s payroll tax hike and could result in higher prices.
The new packaging rules — known as extended producer responsibility, or EPR — are expected to particularly hit businesses with low margins, such as supermarkets, pubs and other hospitality firms.
EPR is due to come into effect next year and aims to make the companies that produce packaging for consumer goods responsible for the cost of household recycling, instead of councils.
The British Retail Consortium has previously estimated EPR will add £2 billion ($2.5 billion) to retailers’ tax bills — almost as much as the £2.3 billion added by Chancellor the Exchequer Rachel Reeves’ changes to employers’ national insurance contributions.
The BOE’s agents’ summary, published Thursday alongside the BOE’s interest rates decision, found similar results. “Food and drinks manufacturers, hospitality and grocers are increasingly mentioning EPR costs,” the BOE said, “which for some will be at least as large as the increased costs of NICs.”
The survey said higher taxes, the EPR and the rising minimum wage are expected to lift inflation.
Earlier this year beer and pub groups penned an open letter to the government warning that the sector’s estimated £212 million bill from EPR costs risks resulting in some businesses failing. The tax will add 3 pence to 7 pence on each 330ml glass bottle sold in the UK, it added.
The BoE’s warning comes a day after data showed the consumer prices index rose to an eight-month high in November. The bank held its benchmark rate at 4.75% Thursday, but three officials voted in favor of an immediate reduction citing concerns over a weak labor market and demand.
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