Sugar Tax – A Sweet Success?

Sugar Tax 25.06.18

“Why has my favourite can of pop suddenly gone up in price?” Your answer = the Sugar Tax. In a bid to end obesity and tooth decay, the UK government have recently introduced a new tax on soft drinks with high sugar content. But when was the new tax brought in and what products will it affect? This article will give you everything you need to know about the new tax.

What is Sugar Tax?

Commonly referred to as the ‘Sugar Tax’, The Soft Drinks Industry Levy is placed on drinks that contain high sugar levels. The new tax was announced this year in March and came into effect on Friday 6th April 2018.

The levy is imposed only on manufacturers, which may not necessarily affect consumers. That is, unless soft drink recipes are altered, or companies price their products at a premium to compensate for extra production costs.

There are two bands of taxation:

  • For drinks with 5g-8g of added sugar per 100ml = 18p per litre
  • For drinks with 8g of added sugar or more per 100ml = 24p per litre

Companies are encouraged to reformulate their recipes, and those that don’t will be subject to the levy. Since it’s introduction, the new tax has successfully resulted in 50% of manufacturers reducing the sugar content in their drinks, which equivalates to a total of 45 million kg of sugar each year.

Why is Sugar Tax Important?

According to GOV.UK, millions of people across the UK will benefit from the Sugar Tax, especially children. The main goal of the tax is to crack down on childhood obesity and significantly reduce the risks of developing illnesses caused by high sugar intake.

The tax was originally estimated to amount to £520 million, which was promised by the government to be used to fund sports in primary schools and breakfast clubs. However, in a bid to avoid the taxation, some manufacturers have completely altered their recipes which has reduced the estimate to £240m.

What Products Will This Affect?

Products which state they are sugar free, such as Diet Pepsi or Fanta Zero will not be targeted by the new tax, only drinks with added sugars will be.

Coca Cola® is expected to be the company that will be hit the most by Sugar Tax in the UK. Their classic Coke is the biggest-selling sugary soft drink in the UK, and the company have refused to change their recipe to avoid the tax, insisting consumers enjoy their products just as they are. With consumers still willing to pay higher prices for the classic can of Coke, the company could run up a bill of an astounding £124.7 million next year if they achieve the same sales as last year at £619.8 million, according to IRI.

It has been said that the standard 330ml cans of Dr Pepper, Pepsi and Coke could cost consumers 8p more, whereas Sprite and Fanta could cost 6p more.

For those that enjoy cakes, biscuits and other sugary snacks – relax. These consumables are not covered by the tax, however a separate initiative to reduce sugar is in the pipeline.

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Sam Rose

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