Budget springs sugar tax

CHANCELLOR George Osborne sprang a surprise sugar tax on soft drinks manufacturers and importers in last month’s budget. From April 2018 companies will have to pay a charge – likely to be 18p per litre for drinks with more than 5g of sugar per 100ml and a higher 24p amount for drinks with more than 8g per 100ml – to the government.

The effect on consumer prices will depend on how manufacturers and importers, wholesalers and retailers pass on the charge.

Drinks that would currently fall under the higher rate include Coca-Cola, Pepsi and Irn-Bru. If the charge were passed through in its entirety it would mean retailers would add just over 8p to the base price of a 330ml can. With VAT at current rates it would mean the price of a 330ml drink could increase by around 10p a can.

Irn Bru Jan 16 PMP 2litre REGULAR AND SF, PMP
Will the one on the left cost 58p more than the one on the right from 2018?

A two-litre, take-home sized bottle of higher than 8g per 100ml soft drink could see base price rise by 48p, which would translate into a VAT-inclusive increase of around 58p. That could mean an increase in the price of the cheapest two-litre sugar-sweetened colas in discounters from around 42p to £1 – a hike of 138%.

Pure fruit juices and milk-based drinks will be excluded from the sugar charge.

Osborne cited health concerns and said he was not prepared to tell the next generation that the government had known of disease dangers but had ducked difficult decisions.

But the move has been heavily criticised by the soft drinks industry, Gavin Partington, director general of the British Soft Drinks Association, said: “We are extremely disappointed by the government’s decision to hit the only category in the food and drink sector which has consistently reduced sugar intake in recent years – down 13.6% since 2012.

“By contrast sugar and calorie intake from all other major take-home food categories is increasing – which makes the targeting of soft drinks simply absurd.”

Association of Convenience Stores chief executive James Lowman said: “Soft drinks make up 6.6% of convenience stores’ sales, and shoppers now have a wide choice of full-sugar, low-sugar and no-sugar soft drinks when they visit any local shop.”