UK Treasury chief George Osborne has unveiled a new tax on sugary drinks, to be implemented in 2018.
Osborne stated that the health implications of sugary drinks costs the UK economy £27 billion ($38 billion) a year, which is more than half the entire National Health Service (NHS) paybill.
“One of the biggest contributors to childhood obesity is sugary drinks. A can of cola typically has nine teaspoons of sugar in it. Some popular drinks have as many as 13. That can be more than double a child’s recommended added sugar intake,” Osborne said during his 2016 Budget statement.
“I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation: ‘I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing’. So today I can announce that we will introduce a new sugar levy on the soft drinks industry.”
The sugar tax will be introduced in two years’ time to allow companies time to change their product contents.
Companies will be assessed on the volume of sugar-sweetened drinks they produce or import, and there will be two bands – one for total sugar content above five grams per 100 millilitres; a second, higher band for the most sugary drinks, with more than eight grams per 100 millilitres.
Pure fruit juices and milk-based drinks will be excluded, and Osborne says the smallest producers will not be impacted by the levy.
Osborne says that companies will be able to promote their low-sugar or no-sugar brands, and if they choose to pass the price on to the consumers, this will be their decision, however he warns this may have an impact on consumption.
“We understand that tax affects behaviour. So let’s tax the things we want to reduce, not the things we want to encourage,” said Osborne.
Osborne added that credit is due to the companies who have taken action to reduce the sugar levels in their products, such as Robinsons, which has removed added sugar from its cordials and squashes, and UK supermarkets Sainsbury’s, Tesco and the Co-op, which have committed to reduce sugar across their ranges.
“Industry can act, and with the right incentives I’m sure it will,” he said.
The Office for Budget Responsibility estimates that the levy will raise £520 million ($740 million).
The money will be used to double the amount of funding the UK government dedicates to sport in every primary school.