Potential Scottish Cup Levy

In meetings with Scottish government, a consistent analogy for the cup levy has been the carrier bag charge. This theme was continued in the recent disposable cup charge advisory group meeting and will no doubt be continued beyond it. The two situations, however, are completely different.  

In placing a charge on carrier bags, retailers had an alternative which made them money: bags for life. In the case of coffee cups not only do retailers have the risk of reduced sales as a consequence of the charge (impulse purchasers with no reusable) but also have the added cost of reusable systems. This could include the cost of installing dishwashers, with the costs of chemicals and water or being part of a reusable scheme. From presentations on systems which include the supply of reusables, it would seem the cost per serving exceeds that of a single use cup and this inevitably will push up prices.

However the charge develops, retailers will be able to deduct VAT, cup costs and costs in administering the charge. The alternative to the charge is a reusable and this not an item that would provide revenue to retailers. There are two options for applying a charge. In one, a drink served in a reusable cup is costed at the price of a cup of coffee, less the levy but with the levy charge likely to be greater than the cost of the cup, the retailer is receiving less money per serving along with the added costs of servicing reusables. This therefore is a very good argument for retailers having the option to retain the levy revenue to help sustain their businesses, as is the case with Defra’s last legislative amendment to the carrier bag charge - a change we fully support.

With such a large number of independent operators, the value of the levy less VAT could be a significant lifeline. The intention is net levy revenue would be directed to a central fund to support environmental projects. Apart from a strict definition as to what constitutes an environmental project, the idea of a central fund, especially if managed by government, surely makes this proposed charge, a tax? If that is what it is in reality, then let everyone be honest and refer to it as the coffee cup tax.