Budget 2016: George Osborne's tax on sugary drinks could lead to people consuming more sugar, IFS says

Paul Johnson, director of the IFS, said only one-fifth of total sugar consumption comes from drinks

The tax on sugary drinks announced by George Osborne in Wednesday's Budget could lead to people consuming more sugar as they turn to foods instead, according to the Institute for Fiscal Studies.

Mr Paul Johnson, director of the IFS, said only one-fifth of total sugar consumption comes from drinks. 

That means that 80 per cent of sugar consumption comes from other things.

Mr Johnson stressed that the policy for a sugary drinks tax - not a blanket sugar tax - could mean consumption of sugary foods will rise in the aftermath "as people move away from drinks to other sugary products", substituting Coca Cola for chocolate, for example.

Mr Johnson said that the tax was sound in economic terms, but more difficult to implement than other policies with similar economic grounding such as tax on alcohol, because sugar appears in so many products. 

But he said it had a curious structure. Rather than taxing the amount of sugar in the drink, so that the tax per gram of sugar is constant, and the amount of tax rises in proportion to the amount of sugar, the policy splits drinks into two bands.

One band is for products containing 5g of sugar and above per 100ml, and one for those with 8g per 100ml. That means sugary drinks will by hit with a levy of 18p or 24p per litre, according to which band they fall into.


The levy comes into place in two years to allow companies to change their ingredients ahead of its implementation.

Soft drinks containing 330ml of liquid would currently be 8p more expensive per can if they are in the top band, or 12p more on a small bottle and 40p more on a 1.75 litre bottle.

Mr Osborne has implemented the sugary drinks tax to try and combat childhood obesity. 

The IFS is widely accepted as the authority on the Budget for its analysis that comes out the day after the Chancellor's spending plans are announced.