A coalition of nearly 70 global fashion organizations, including H&M Group, Primark, and Vinted, has issued a formal joint statement demanding urgent policy reforms to remove systemic economic barriers hindering the growth of resale and repair services. Despite projections that the global circular fashion market could reach $393 billion by 2030, industry leaders argue that current tax frameworks remain fundamentally biased toward virgin production. Research from the Ellen MacArthur Foundation highlights, resale and repair activities, which are inherently labor-intensive, are frequently subjected to double taxation on every transaction. This structure effectively penalizes circular models, making it far more profitable for retailers to rely on linear ‘take-make-waste’ production than to invest in longevity.
Proposed policy levers for circular scaling
To bridge the profitability gap, the coalition is urging governments in the EU, North America, and Canada to implement three targeted interventions: the reduction of VAT in Europe and the elimination of sales tax on resold goods in North America; the introduction of lower labor taxes and dedicated tax credits for jobs created in repair and sorting; and the expansion of Extended Producer Responsibility (EPR) schemes to fund the necessary infrastructure for collection and sorting at scale. Industry estimates suggest that these adjustments could boost gross profit margins for resale and repair businesses by up to 55 per cent and 41 per cent, respectively. Leyla Ertur, Chief Sustainability Officer, H&M Group, emphasized, if governments are truly committed to circularity, they must stop viewing circular businesses as niche segments and start addressing the structural fiscal penalties that currently prevent these models from competing on a level playing field with traditional retail.
The Fashion ReModel initiative
The Fashion ReModel is a multi-stakeholder project led by the Ellen MacArthur Foundation to help brands and retailers scale circular business models. It explores ways to decouple growth from the extraction of new resources, focusing on the infrastructure and policy changes necessary to make resale and repair commercially viable at scale.
