Treasury seeks views on sugary drinks tax

18 Aug 16

The government has started consulting on the introduction of a tax on sugary drink manufacturers, which it hopes will help bring down childhood obesity rates.

Sugary drinks

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The consultation on the Soft Drinks Industry Levy asks what drinks should be included in the scope of the scheme, the appropriate taxing point and how to keep small operators out of the charge.

Under plans first set out by former chancellor George Osborne at the Budget this year, the levy will be charged on UK producers and importers of soft drinks with added sugar. It will apply to volumes of drinks with total sugar content of 5 grams or more per 100 millilitres. A higher rate will be levied on drinks with 8 grams or more of sugar per 100ml.

Publishing today’s consultation, financial secretary to the Treasury Jane Ellison said the tax would raise £520m in the first year, with revenues falling over time as producers reformulate drinks and consumers shift their behaviour. It has been estimated by the Office for Budget Responsibility that this implies a levy rate of 18p per litre for drinks with 5-8g of sugar per 100ml, and a higher rate charge of 24p per litre.

Companies will have two years to reformulate before the levy begins in April 2018.

“A 330 millilitre can of full-sugar cola typically contains nine teaspoons of sugar. Some popular drinks have as many as 13 teaspoons. This can be more than double a child’s daily recommended added sugar intake in just a single can of drink,” Ellison said.

“The government recognises that this is a problem. Many in the soft drinks industry have recognised this too, and have started to reformulate their product mix. Some companies have started to reduce the sugar content of their drinks, move consumers towards diet and sugar-free variants, and reduce portion sizes for high sugar beverages.”

Revenue raised from the plan will be spent on programmes to encourage physical activity and balanced diets in school-aged children. For Scotland, Wales and Northern Ireland, the Barnett formula will be applied to spending on these new initiatives in the normal way.

The consultation comes after the first corporate plan published by Food Standards Scotland yesterday stated it would explore possible taxes for junk food if voluntary arrangements with industry proved to be unsuccessful. This would be in addition to the UK soft drinks levy.

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