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Treasury vows that the 'sugar tax' will go ahead as planned

Ministers refuse to drop the controversial measure - insisting it is badly needed to tackle a 'problem with sugar-laden soft drinks'

Rob Merrick
Deputy Political Editor
Monday 05 December 2016 19:04 GMT
George Osborne announced a sugar tax on the soft drinks industry earlier this year
George Osborne announced a sugar tax on the soft drinks industry earlier this year (PA)

A ‘sugar tax’ will be introduced to tackle the crisis of obesity and tooth decay despite protests, the Treasury has confirmed.

Ministers vowed to plough ahead with the controversial measure – raising hundreds of millions of pounds for school sports – to be introduced in April 2018.

A spokesman said: “British children are currently consuming three times the recommended amount of sugar and health experts agree there is a specific problem with sugar-laden soft drinks.

“Tesco has shown that it is possible to reduce added sugar without costing jobs or increasing prices, and the makers of Lucozade have announced they too will cut sugar.

“As part of our world-leading obesity plan, the sugar levy will encourage others to play their part and reformulate.”

The levy was first announced in March, when the government announced it target the producers and importers of soft drinks with added sugar.

The tax is expected to net £520m in 2018-19, with a further £500m in 2019-20 and £455m in 2020-21.

In recent weeks, the idea has faced a backlash from critics who said it would hit the poor the hardest and fail to raise the sums expected – leaving school sports shortchanged.

Theresa May has shown an enthusiasm for ditching key aspects of George Osborne’s legacy, including deficit targets, shares for rights and annuities reform.

But the Treasury has now confirmed that the legislation put into the Finance Bill next year, paving the way for it to be introduced the following April.

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. These rates have yet to be set.

The independent Office for Budget Responsibility (OBR) estimates the levy could add 18p to 24p to the price of a litre of fizzy drink if the full cost is passed on to the consumer.

Pure fruit juices will be exempt as they do not carry added sugar, while drinks with a high milk content will also be exempt because of their calcium content.

Alcoholic drinks with an alcohol by volume of up to 1.2% (ABV) are included in the levy although some of these drinks will be exempt.

The document acknowledged: “The implementation of a soft drinks industry levy is expected to add around a quarter of a percentage point to Consumer Price Index growth in 2018 to 2019.

“Overall, the levy is expected to have a positive impact on the health of individuals in the UK.”

At the weekend, the British Soft Drinks Association director-general Gavin Partington said: “Evidence worldwide does not suggest that taxes of this sort have any impact on levels of obesity.”

And the Taxpayers' Alliance labelled the sugar tax an “ill-thought-out reaction” to pressure from the public health lobby.

But Alison Cox, Cancer Research UK's director of prevention, said: “The sugar tax isn't law yet but it's already started to work.

“Companies are reducing the amount of sugar in their drinks and with the details of the tax published today we can expect many more to follow suit.”

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