Hungary's soon-to-be-imposed charge on packaging could trigger shocking price increase
MAHUSZ believes that the regulation setting the rates for Extended Producer Responsibility (EPR) would have serious consequences if it were to enter into force on 1 July in its current form. For paper packaging, the EPR charge, which is 9.1 times higher than the current environmental product charge, would also drastically affect a particularly environmentally friendly packaging material: corrugated paper.
This packaging material already has a uniquely high recycling rate of 90% and an average recycled content of 89%, which is supported by domestic data. The preparation and publication of the decree was not preceded by meaningful industry consultation that could have helped to develop a regulation that better supports long-term sustainability plans than the current one.
MAHUSZ fully agrees with the objectives of the Extended Producer Responsibility (EPR) system, with which the EU intended to encourage producers to design products in an environmentally friendly way, to minimise waste and to recycle or manage waste properly. MAHUSZ believes that this is in the common interest of all.
However, the specific rates set in the Hungarian regulation are set at such unrealistically high levels that they would not only impose onerous requirements on the Hungarian economy, especially on the food industry and consumers, but would also run completely counter to the original aim of protecting the environment and jeopardise the progress already achieved in the field of sustainability.
In 2021, the subjects of the regulation paid HUF 42.5 billion in product charges on packaging into the budget. In contrast, the EPR liability for packaging under the new regulation could reach HUF 240 billion. This increase is so drastic that manufacturers will be forced to include it in their prices.
This means that the price of packaging for products will increase, which, taking into account the trade margin and the 27% VAT, could lead to inflation of up to 5%, according to the organisation's calculations.
The competition authority (GVH) argues that "the extended producer responsibility fee per kilogram for packaging that has a lower environmental impact and is more easily recyclable (e.g. paper, glass or textiles) is much lower than for plastics, for example, thus motivating manufacturers to adopt environmentally friendly packaging solutions."
MAHUSZ points out, however, that corrugated board is just such an environmentally friendly material. But the legislation would also impose a levy on it, and in fact the highest of all packaging materials.
The previous environmental product charge of 19 forints per kilogram for paper would be replaced by an EPR charge of HUF 173 / kg, an increase of 9.1 times. This would, in the organisation's strong view, effectively stifle efforts towards a sustainable and circular economy. The food industry, which is a major user of corrugated packaging materials, could be particularly vulnerable.
The high EPR tariffs not only go against the EU's intentions, but also against the Hungarian government's objectives. MAHUSZ points out that the preparatory document for Hungary's National Circular Economy Strategy, published in April in cooperation with the Prime Minister's Office, the OECD and the EU, aims, among other things, to double Hungary's circular material use rate by 2040.
The corrugated paper sector could make a major contribution to this, as it has also played a major role in the fact that in the field of paper waste, Hungary already met the EU's 75% recycling target for 2025 in 2020, MAHUSZ added.
In MAHUSZ's view, it is essential to review the EPR tariffs set out in the decree in order to achieve further results and to maintain the achievements made so far.
Cover photo: Getty Images
