From our blog

The sugar tax

Sugar tax

A sugar tax has been on the cards for some time now; but still some were surprised when George Osborne announced its arrival last month as part of the Budget unveiling. Not least because the government had publically announced no plans to introduce a tax on sugar-sweetened beverages just months earlier.

While some are sceptical about this U-turn and the impact that a tax will have on our sugar consumption; others are hoping that it will persuade manufacturers to reduce the amount of sugar they pack into their products.

Do we need a sugar tax?

Obesity is a big problem in the UK, and it currently costs the NHS a huge £5.1 billion per year. The number one cause of this epidemic: sugar. Despite its dangers we can’t seem to get enough, with teenagers and children consuming three times the recommended allowance.

A recent report claims that 80,000 lives in a generation could be saved, just by tackling our sugar addiction and reducing our consumption of the sweet stuff.

Compelling facts, but the sugar tax has attracted its fair share of opposition. While Jamie Oliver labelled it “a profound move” on Twitter, others think it’s the wrong solution to the right problem. Critics have commented that the tax will only serve to push up costs for society’s poorest.

“We already have a sugar tax. It’s called VAT. Most foods and drinks in the UK are exempt from VAT, but sweets, chocolates, sports drinks, and soft drinks are standard-rated for VAT – so there’s already effectively a 20 per cent sugar tax on sweets, chocolates and soft drinks. Yet despite it, obesity levels have not gone down.” commented Alex Deane in an article for the Telegraph.

What will the sugar tax involve?

Despite the opposition, plans for the sugar tax are underway and its introduction is scheduled for 2018. It’s hoped that this will give companies enough time to change their recipes in order to avoid the tax altogether.

When it does come into effect, the sugar tax will have soft drinks firmly in its sights. Other high sugar snacks such as cake and chocolate will not be included. The reason for this is that soft drinks, unlike cake, aren’t necessarily seen as a treat and many people indulge every day.

There will be two levels of taxation. One for soft drinks with more than 5g of sugar per 100ml and another higher band for drinks with more than 8g of sugar per 100ml. Fizzy drinks that currently fall into the higher band include Coca-Cola, 7Up, Red Bull, Dr Pepper and Ribena.

It’s expected that any price increases as a result of the tax – which are yet to be confirmed – will be passed on to consumers. The Office for Budgetary Responsibility forecasts that a 1% rise in price will equate to a 0.8–1% reduction in demand. Milk-based drinks such as Frappuccinos, will surprisingly be exempt from the tax, despite containing eye-watering quantities of sugar.

How will the money be spent?

The government anticipate that the sugar tax will raise £520m across the UK. All of the money raised in England will be invested in sport in primary schools.

One thing is for sure; all eyes will be on the sugar tax when it’s rolled out in 2018. Early signs are looking promising, and Iron Bru has already reassured its investors that it will be making changes to ensure that two thirds of its products are either no-sugar or low-sugar by April 2018.

Book your free consultation

Arrange a complimentary consultation with our friendly and knowledgeable team