All you need to know about the new '˜sugar tax'
Jamie Oliver and health charities have welcomed a sugar tax that could hit drinks such as Irn-Bru, Coca-Cola, Pepsi, Red Bull and Fever Tree tonic water.
The celebrity chef was among those who expressed joy at the surprise move, unveiled by George Osborne as part of the Budget.
The tax - which will be brought in in two years’ time to give manufacturers time to drive down the sugar content of their drinks - is expected to raise £520 million.
This will be used to double the amount of funding for sport in every primary school, with secondary schools encouraged to offer more sport as part of longer school days.
Drinks with 5g of sugar per 100ml will face a lower rate of tax while those with more than 8g per 100ml will face a higher rate.
Malcolm Clark, co-ordinator of the Children’s Food Campaign, said: “This is a really important victory for children’s health. Not only will this tax on sugary drinks encourage people to shift towards healthier drinks, but it sends out a wider message about our need to cut down on sugar, and for businesses to reduce the sugar in their products.”
However, Roger White, the chief executive of AG Barr, whose biggest brand is Irn-Bru, described the move as “extremely disappointing”.
YOUR QUESTIONS ANSWERED ABOUT THE NEW TAX
• When will it come into force?
From April 2018 soft drinks companies will pay a levy on drinks with added sugar.
• Why are the Government introducing this tax?
The move aims to help tackle childhood obesity. Sugar-sweetened soft drinks are now the single biggest source of dietary sugar for children and teenagers. Ministers hope the move will mean that drinks companies cut down on the amount of sugar in drinks. The measure could also move consumers towards lower sugar alternatives and reduce portion sizes, they said.
• How will it work and who will pay?
The new levy will apply to drinks with total sugar content above 5 grams per 100 millilitres, with a higher rate for more than 8 grams per 100 millilitres.
• What sort of drinks will be affected?
Examples of drinks which would currently fall under the higher rate of the charge include full-strength Coca-Cola and Pepsi, Old Jamaica Ginger Beer, Capri Sun blackcurrant, Red Bull, Strawberry Ribena, Lucozade Energy, Irn-Bru and Fever-Tree tonic water, said the Treasury.
The lower rate would catch drinks like Dr Pepper, Fanta, Sprite, Schweppes Indian Tonic Water and alcohol-free shandies. Escaping the tax altogether would be drinks like Volvic Touch of Fruit, Vimto, Powerade and Tropicana Smooth Orange.
• Will it apply to all drinks?
The new levy will not be paid on milk-based drinks and fruit juices.
• Does this mean that sugary drinks will be more expensive?
The Office for Budget Responsibility (OBR) has estimated it could add 18-24p to the price of a litre of fizzy drink if the full cost is passed on to the consumer.
But a Treasury spokesman said: “We are hoping that producers do not pass on to consumers the costs. They can obviously reformulate their products, which many of them have done, and Robinson’s for example has removed added sugar from most of its drinks and Tesco has pledged a 5% reduction in sugar in its ranges.
“So they can reformulate, they can reduce portion sizes and they can promote diet products.”
• How much money will this new tax raise?
Ministers hope the measure will raise £520 million in the first year. But the OBR estimates that this figure will drop as drinks companies reduce the sugar in their products and people make healthier choices.
• Is the Government the first in the world to introduce such a tax?
No - other countries have experimented with sugar taxes. Scandinavian countries have imposed similar taxes as have France and Hungary. In 2014 Mexico also introduced a sugar tax levy on soft drinks. South Africa plans to introduce a similar measure in 2017.
• Has the Government looked at how these levies have worked elsewhere?
The Treasury said it has looked at the way sugar taxes have been used around the world and opted for a model similar to Hungary, where the introduction of a tax on companies has led to a 40% reduction in levels of sugar in products.
• What else is the Government doing to help tackle childhood obesity?
The Department of Health will set out its childhood obesity strategy in the summer.