Will the Sugar Tax Leave a Sour Taste for the Food Industry?

A controversial sugar tax will hit the UK soft drinks industry next month. Up to 24p could be added to the price of each bottle as the government strengthens its resolve to improve public health. Despite multiple potential benefits, the legislation has attracted criticism as it represents an unprecedented conflict between parliament and the food retail sector.

Drinks with five grams of added sugar per 100ml will be taxed at 18p per litre while those with eight grams will be levied by 24p. A seemingly drastic measure, the Department for Health and Social Care believes it is necessary to combat rising obesity statistics. By 2050, it is estimated that 35% of boys and 20% of girls between the ages six and ten will be obese. To avoid the subsequent pressure on the NHS, the government believes they must target the food trade directly.

Although the tax was first proposed in 2016, it will come into full effect on the 6th April 2018. In this time, soft drink companies have had ample opportunity to reduce their sugar content and avoid the levy altogether. Had the tax been imposed immediately in 2016, it would have generated £530 million. That figure has now been reduced significantly to £385 million. Camilla Cavendish, author of the Soft Drinks Industry Levy, believes this proves the taxation’s effectiveness, she explains; “Every single company, except one, has reformulated its drink to avoid the tax. Which I think is a huge success.”

However, Deloitte warns “this arguably marks the first step towards the government tackling potentially unhealthy foods through tax measures.” While parliament has long been pushing manufacturers to lower the sugar content in their products, this is the first time they have interfered so aggressively. As a result, the food industry must become more health-conscious if it wishes to avoid further ‘sin taxes’ being placed on its produce.



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