The Chancellor of the exchequer outlined the introduction of the sugar levy on water-based soft drinks, which will be introduced in two years, in his budget yesterday (16 March).
Taxing the sector could raise up to £520m and would force soft drinks manufacturers to reduce sugar content and therefore help combat the UK’s growing obesity epidemic, according to the Government.
However, the trade needed confirmation on whether the charge would be a true levy on producers and not a sales tax aimed at increasing costs for operators, said the Association of Licensed Multiple Retailers (ALMR) chief executive Kate Nicholls.
“The Chancellor has indicated there will be a consultation on its introduction and the ALMR will be looking to liaise with the Government to ensure that additional costs are not passed on to pubs and bars,” she said.
Would feel the effect of the sugar tax
It was unlikely operators would feel the effect of the sugar levy, though, claimed Nicky Strong, legal consultant at the law firm Bond Dickinson.
“The so-called sugar tax has finally come to fruition, albeit only on water-based soft drinks, so excluding pure fruit juices and milk-based drinks,” she explained.
“The levy will be calculated on the total sugar content of these drinks and will be charged direct to producers and importers, rather than being added to the price paid by consumers.”
Yet, the tax would inevitably affect pubs and retailers in some way, manufacturing trade bodies warned.
The Food and Drink Federation (FDF), the organisation that represents UK food and drink manufacturers, claimed the sugar levy would stunt soft drinks innovation.
Director general of the British Soft Drinks Association Gavin Partington outlined his “extreme disappointment” about Osborne’s decision.
The move would hit the only food and drink category that had consistently reduced sugar intake in recent years – with sugar levels in soft drinks down 13.6% since 2012 – he added.
He said: “We are the only category with an ambitious plan for the years ahead – in 2015 we agreed a calorie reduction goal of 20% by 2020.”
However, Osborne’s sugar tax wasn’t shunned by all, with the chair of the lobby group Action on Sugar welcoming the move.
Sugar lobby boss Professor Graham MacGregor said: “We are delighted to see in the budget announcement that the government will be introducing a new sugar levy on soft drinks which will be used to double the funding they dedicate to sport in every primary school.”