Sugar tax may be ‘followed by further food taxes’

By Michelle Perrett

- Last updated on GMT

The tax on sugary drinks could be the first of more new food taxes
The tax on sugary drinks could be the first of more new food taxes

Related tags: Soft drinks, Sugar substitute, Sugar

The government’s sugar tax on soft drinks could open the floodgates for further food taxes, warns accountants Old Mill.

Chancellor George Osborne revealed plans for a sugar tax on soft drinks, which would come into force in two years’ time, in last month’s budget. He said it would be expected to raise £520M in its first year.

The ‘soft drinks industry levy’ will be paid by producers of soft drinks that have added sugar. However, exemptions were promised for smaller-scale producers and the legislation will not be implemented until 2018.

That prompted Mark Shelton, food and drink consultant at Old Mill, to dismiss the tax as apparently “little more than a gesture”.

“Soft drinks already have a huge price variation depending on where they are purchased,​ said Shelton. The price in a supermarket is far less than a corner shop, an event, café, or motorway services, so this extra cost is unlikely to act as a deterrent to consumers,”​ he said.

‘Do not appear to have had any affect’

“There are also plenty of directly comparable low sugar or sugar free products available, which do not appear to have had any effect on changing purchasing patterns.”

Shelton also suggested the tax could be the start of further taxation on the industry.

“There are concerns that this may be the first step by the government towards further taxation on sugary food and drinks, following a similar trend to tobacco and alcohol taxes,” he added.

“The money generated will supposedly fund work to tackle childhood obesity; if this is the case, then there are plenty of other foods containing high levels of sugar that the government might look to target next.”

Shelton added:“But in an industry already flooded with sugar-free alternatives, there are questions about whether the tax will make any difference to consumer habits at all.”

Delight and dismay

The shock news of the sugar tax was greeted with both delight and dismay.

Jubilant Jamie Oliver posted on his Instagram account: We did it guys! We did it.​ A profound move that will ripple around the world ....business can not come between our kids’ health!”

But the British Soft Drinks Association (BSDA) was “extremely disappointed”​ by the decision.

BSDA director general Gavin Partington said the government had decided to “hit”​ the only category in the food and drink sector which has consistently reduced sugar intake in recent years – down 13.6% since 2012.

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