Government says sugar tax is to go ahead in April 2018 in spite of opposition

Ministers confirmed this week that the soft drinks levy (or “sugar tax”) will be introduced in April 2018, despite industry opposition.

In the Government’s response to the consultation published on Monday (December 5), Treasury Minister Jane Ellision said the policy would encourage product reformulation while minimising unnecessary burdens on business.

“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,” she said.

Secondary legislation will be published for consultation in early 2017, with the final levy rates announced in the 2017 Budget. Drinks with 5g of sugar per 100ml will face a lower rate of tax, while those with more than 8g per 100ml will face a higher rate.

The government confirmed that the levy would be implemented on producers and importers rather than as a point of sales tax.

The FWD has expressed concerns that introduction of a levy could led to the growth of illicit and grey markets, to the detriment of legitimate suppliers, and the Association of Convenience Stores has argued that a sugar tax will affect small businesses disproportionately.

ACS chief executive James Lowman said: “Convenience stores are already playing an important role in addressing the issue of obesity by increasing their ranges of healthy and fresh foods. We are concerned that a levy on soft drinks manufacturers will result in increased costs for retailers, as the manufacturers could pass on the levy through the supply chain.

”Smaller retailers do not have the buying scale to resist these costs being passed on to them, whereas large multiple retailers can push back against additional costs caused by exchange rate changes, production cost increases, or the introduction of a levy like this. We fear that the sugar levy will disproportionately impact smaller retail businesses and will respond to the technical consultation in the new year, urging the government to work with suppliers and retailers on a partnership approach instead of the blunt instrument of a soft drinks levy.”

British Soft Drinks Association director general Gavin Partington said: “Evidence worldwide does not suggest that taxes of this sort have any impact on levels of obesity.

“However, we will review the legislation when published and will continue to work with Treasury officials during the process of implementation.”

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