U.K. Government to Tax Soft Drink Companies

Beginning April 2018, soft drinks companies will pay a levy on drinks with added sugar.

March 17, 2016

BRITAIN – This week U.K. Treasury Chief George Osborne announced a sugar tax on soft drinks as part of his budget plan, the BBC reports, adding that the tax plan, set to take effect in 2018, would not apply to juice or milk-based beverages, and the estimated £520m raised by the tax would be spent on primary school sports in England, with the administrations in Scotland, Wales and Northern Ireland free to decide how to spend their share.

“I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation: ‘I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing.’ So today I can announce that we will introduce a new sugar levy on the soft drinks industry,” said Osborne.

The BBC writes that Osborne's sugar tax announcement “sparked a big fall in the share price of soft drink makers,” but was welcomed by TV chef Jamie Oliver, who called the sugar tax “a big moment in child health” and a “symbolic slap” to business rather than “anti-business.”

James Lowman, chief executive at the Association of Convenience Stores (ACS), told Planet Retail that 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. The chancellor’s new levy on soft drinks companies would have been better considered as part of a holistic strategy to tackle obesity.”

The tax will be imposed on companies according to the volume of the sugar-sweetened drinks they produce or import, notes the BBC, adding that the tax could result in a “pretty substantial price rise”—as much as 80%, for example—on a two-liter bottle of soda. There will be two rates for the tax: one for total sugar content above 5g per 100 milliliters, and a second, higher rate for soft drinks with more than 8g per 100 milliliters.

BBC Health Editor Hugh Pym said the inclusion of the tax in the chancellor’s budget had come as “a bolt from the blue,” particularly as Downing Street “had opposed the idea last fall.”

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