Sector News

Sugar tax will harm jobs and economy

July 13, 2016
Food & Drink

The Government’s mooted sugar tax will not only fail in its public health aims but it will also result in fewer jobs and damage to the UK economy, according to the TaxPayers’ Alliance.

George Osborne proposed a tax on sugary soft drinks in a surprise announcement in this year’s Budget.

The Chancellor proposes two bands on tax: one for drinks with sugar content above 5g per 100ml, which includes Fanta and Sprite, and a higher levy for drinks above 8g which means Coca-Cola, Red Bull, Irn Bru, Lucozade and Ribena would all be targeted.

The Treasury has said it expects the levy to raise £520m in the first year which the Chancellor has said would be spent doubling funding for sport in schools.

However, the tax has been widely criticised by both the industry and Iain Wright MP, chairman of the Food and Drink Federation who has argued that imposing the tax would be “almost impossible” and said that there were few guarantees that the levy would be passed on to consumers and therefore reduce consumption.

Mr Osborne’s proposals are based on findings in Mexico, which has one of the world’s worst weight problems with a third of adults obese and introduced a 10pc sugar tax on sugar-sweetened drinks in 2014.

A paper published in the BMJ in January found that sales of fizzy drinks had fallen by 12 per cent in the first year. However, the Taxpayers’s Alliance has said that the sugar tax led to 10,815 fewer jobs in the industry and if this was applied to Britain would result in 5,624 fewer jobs.

As a result, the Treasury would received £17m less in job-related taxes including national insurance contributions. Jonathan Isaby, chief executive of the TaxPayers’ Alliance said: “Not only will the sugar tax fail in its public health aims, there is a very real risk that it will destroy jobs and harm economic growth.

“Given it will also hit the poorest households the hardest, the already flimsy case for a Sugar Tax is rapidly dissolving. The government should be focusing on policies which encourage economic growth, so the sugar tax should be immediately scrapped.”

A report by McKinsey last year suggested that drinks reformulation and smaller portions were more effective than taxes at reducing obesity.

The UK boss of Coca-Cola, Jon Woods, has argued that soft drink sales are already falling and that people are switching from regular drinks to no sugar alternatives. The drinks giant has recently relaunched its Coke Zero which has no sugar but uses sweeteners and also sells Coke Life, which has is sweetened by natural alternative stevia.

Figures from Defra’s Family Food Survey show that between 2004 and 2014, purchases of regular soft drinks declined by 44pc, with the same volume made up by increases in no sugar drinks and water.

By Ashley Armstrong

Source: The Telegraph

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