How taxing will the sugar levy be?

Which of the nation’s favourite fizzies are in the firing line for the new sugar tax?

 

After months of denial and dismissive counter arguments, the government went ahead regardless with plans for an extra levy on sugary soft drinks in their 2016 budget announcements this week (17/3/2016).

The chancellor declared that the new tax will come into force from 2018 giving the drinks industry two years in which to develop their products toward a lower sugar content or face the new taxes which classifies the highest sugar content product into two bands.

Soft drinks with more than 5mg of sugar per 100 millilitres will attract the tax with an even higher ‘penalty’ rate levied on drinks with over 8mg per 100ml.

According to the figures quoted in the budget the levy should add 18p to a litre or around 6p for a standard sized can (330ml) at the lower rate and 24p per litre or 8p per can at the highest rate.

There are exceptions; fruit juice and milk based drinks are exempt, for example, as are the products of any of the smaller companies in the market defined by the treasury as producing or importing less than six million litres of drink a year.

Add to that the surprising number of drinks that don’t reach the government’s threshold; the list of non-taxable drinks (below) includes Tango, Lilt, and R Whites Lemonade, for example.

So it’s clear there are plenty of sugary drinks which won’t be affected even if they make no change between now and 2018.

The two year lead time makes it impossible to judge what practical impact the tax will have without knowing whether manufacturers will take the opportunity to reduce sugar content below the 5mg benchmark. Some, like Schweppes Indian Tonic Water and Sprite, are very close to it already (see below).

Even then it is difficult to forecast the effect an extra 6p or 8p a can will have on a market that has already proved resistant to constant health warnings.

In 2015 the UK consumed nearly 15 billion litres of soft drinks, the equivalent of 230 litres each in a year or roughly two cans a day for every man, woman and child.

The government has assumed no change in purchasing patterns in order to forecast an extra £520m in revenue to be earmarked for sports funding in primary schools, but if no change occurs in consumer behaviour won’t that mean that the tax is a failure?

The chancellor will say that it’s a win-win, because he’ll have the money to invest in promoting sport and exercise in schools.

Others might point out that, if that happens, all we will have accomplished is a new non progressive sales tax with no direct public health benefit which is used to underwrite something that should always have been funded by government in the first place.

Anyone who is old enough to remember the eagerness with which the Thatcher governments sold off school playing fields and public sports pitches to property developers in the 1980s will detect more than a hint of irony.

Will the new tax affect your family consumption of soft drinks? The lists below offer some idea of where the major brands would sit if the tax were imposed today, and their current sugar content (in grams per 100ml).

 

Leading brands in the top tax bracket (18p/Litre 6p/can)

Old Jamaica Ginger Beer Extra Fiery 15.7

Rockstar Punched Guava 15.6

Old Jamaica Ginger Beer 15.2

Mountain Dew 13.0

Coke Cherry 11.2

Pepsi Cola 11.0

Red Bull 11.0

Monster Origin Energy Drink 11.0

7 Up 11.0

Coca Cola 10.6

Fentiman's Cherrytree Cola 10.5

Irn Bru 10.3

Cherry 7-Up 10.0

San Pellegrino lemon 8.9

Vimto Regular 9.1

Lucozade Energy Original 8.7

 

Leading brands in the lower tax bracket (26p/Litre 8p/can)

Dr Pepper 7.2

Fanta Orange 6.9

Sprite 6.6

Schweppes Indian Tonic Water 5.1

 

Leading brands below the 5g threshold (no tax)

Lilt 4.6

Shandy Bass 4.6

Schweppes Lemonade 4.2

Tango Orange 4.3

Tango Blood Orange 3.0

R Whites Lemonade 2.4

Tango Apple 2.1

 

 

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