Soft Drinks Tax

Government reveals potential cost of controversial sugar tax

By Daniel Woolfson

- Last updated on GMT

Sugar tax: many fear the effect on the drinks trade
Sugar tax: many fear the effect on the drinks trade

Related tags: Soft drink, Nutrition

The Government has revealed the extent of costs pubs could be forced to pass on to their customers created by the upcoming sugar tax.

The Office of Budget Responsibility has predicted 18p to 24p could be added to the price of a litre of fizzy drink, with a total of £520m expected to be raised in the tax’s first year.

Secondary legislation will accompany 2017’s finance bill ahead of the levy’s official introduction in 2018.

In an HMRC document released this week, financial secretary to the Treasury, Jane Ellison, wrote: “The Government has always been clear that this this is a levy we would rather not collect – but one which is necessary to help drive down sugar consumption and tackle childhood obesity.

“The Government is determined to act in the best interests of the nation’s children and the soft drinks industry levy has an important part to play.”

Sugary drinks will be taxed in two bands: one for drinks with more than 5g of sugar per 100ml and one for drinks with more than 8g per 100ml. Pure fruit juices, milkshakes and yoghurt drinks will not be taxed.

However, despite health lobbyists largely welcoming the tax, many in the hospitality industry have voiced concerns that, rather than acting as a 'silver bullet' in the fight against childhood obesity, the tax will increase pressure and costs for food and drink businesses.

An Oxford Economics report has claimed the levy could place 4,000 jobs at risk and wipe £132m from the UK’s GDP.

Association of Licensed Multiple Retailers chief executive Kate Nicholls previously told The Morning Advertiser​: “Eating out is an occasional treat and pubs and restaurants have worked hard to reformulate menus, reduce calories and provide customers with greater choice and nutritional information.”

View the Government's full document on the next steps for the levy

Related topics: Soft & Hot Drinks

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