Updated at 9.25pm
THERE WAS BAD news for fizzy drink makers as the government confirmed today that a sugar tax is on the way.
Minister for Finance Paschal Donohoe said there will be a tax of 30c per litre on sweetened drinks with over eight grams of sugar per 100 millilitres.
There will be a reduced rate of 20c per litre on drinks with between five and eight grams of sugar per 100 millilitres.
The minister said the levels are consistent with rates that are being introduced in the UK and will commence in April 2018 subject to State Aid approval.
But what do these new measures actually mean and how will they affect the prices of popular soft drinks?
Which drinks will be affected
Let’s take a look at the range of sugary drinks most popular in Ireland.
Coca Cola (or Coke to most of us), contains 10.6g of sugar per every 100ml. So if you’re drinking a 330ml can you’ll be consuming 35g.
Under the new tax, then the Coca Cola Company will liable for 30c tax on every litre of Coke.
There’s no indication yet on if the company will pass this on to the consumer or bear the brunt of the tax itself so that its price point doesn’t change.
But if it were to pass the full tax onto the consumer – a can of Coke that now costs €1 would cost about €1.10.
Here’s a quick list of popular soft drinks which will go up by the full 30c on the litre when the tax comes in:
Aside from the most sugary drinks, as announced there will also be a reduced rate of 20c per litre on drinks with between five and eight grams of sugar per 100 millilitres.
Falling into this bracket will be drinks like Sprite (6.6g per 100ml) and Fanta Orange (6.9g per 100ml).
Drinks like Diet Coke, Coke Zero, 7Up Free and other artificially sweetened drinks will likely not be included as they contain 0% actual sugar.
Comment
Speaking to TheJournal.ie around the tax, Donohoe said that the funds raised would go back to the Exchequer and wouldn’t go specifically to tackling obesity.
“The sugar tax will be making a contribution to the additional funding that the Department of Health is receiving,” he said.
When I bring in any tax all of the revenue from that tax comes back to the central Exchequer and then its allocated out to all of the government departments. That will be the same with the sugar tax.
Commenting on the news, Britvic Ireland said it was disappointed that the soft drinks sector has been “arbitrarily singled out” in the introduction of the sugar tax.
Managing director Kevin Donnelly said:
It is essential that the Department of Finance and Revenue engages with the industry to ensure that Republic of Ireland manufacturers, retailers, wholesalers, publicans and food service operators are not disadvantaged versus imported product, especially in an environment of weakening Sterling.
We look forward to constructive engagement as soon as implementation details become clearer, most likely in the upcoming Finance Bill. Given the implementation timeline is less than half that afforded to the industry in the UK, early engagement on this matter is crucial.
Recently appointed clinical lead for obesity Professor Donal O’Shea told RTÉ’s Ray D’Arcy that today is a good day.
“The government had to act, we have a public health crisis, and this won’t work on its own. If we hadn’t introduced it now, it just would have been really disappointing. Introduce it, see will it do what we estimate that it will do and then react. If a tax doesn’t work at changing behaviour, you have to take that into account,” he said.
He said he will advocate for more money to go towards the prevention of obesity, saying that there should be significant investment in the Junior Certificate curriculum, which has health and wellbeing in it for the first time.
If you don’t use the money, or an equivalent amount of money for preventive measures for obesity, then the sugar tax is not doing what it can do in the ideal world.
This tax is one of a number of revenue-raising measures in Budget 2018 aimed at improving health in Ireland. There will also be an increase in excise duty on cigarettes and an increased VAT rate on sunbed services.
These measures will contribute to the €685 million increase in health spending for 2018.
*Clarification: A version of this article included Lucozade as a soft drink that would incur the maximum tax. This has now been corrected. Lucozade’s formula was recently changed. Lucozade Original now contains 4.6g of sugar per 100ml (less than the 5g that triggers the levy). Other ingredients include glucose syrup, sweeteners aspartame and acesulfame-K, flavourings and colourings Sunset Yellow and Ponceau 4R which come with warnings that they may have an adverse effect on activity and attention in children.
With reporting from Cormac Fitzgerald and Christina Finn
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