Budget 2017: The sugar tax will raise less revenue than expected (but it's a good thing)

 
Courtney Goldsmith
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The chancellor said producers are already cutting down on sugar (Source: Getty)

The chancellor today set the rate for the so-called sugar tax, but he said sugary drink producers have already worked to reduce the quantity of the sweet stuff in their drinks, which means a lower revenue forecast for his tax.

"This is good new for our children," said Philip Hammond during his Budget speech.

Drinks with a total sugar content of 5 grams or more per 100 millilitres will be set at 18p per litre while those with 8 grams or more per 100 millilitres will be set at 24p per litre.

The Department for Education will receive the full £1bn originally expected from the levy to invest into school sports and healthy living programmes, Hammond said.

The tax was first announced in former chancellor George Osborne's Budget last year.

No need to tax companies voluntarily reducing sugar

Ian Wright, director general of the Food and Drink Federation (FDF), argued the levy should be put on pause while companies continue to reduce sugar levels voluntarily.

Wright said:

We continue to oppose the soft drinks industry levy because of its undue focus on sugar (as opposed to calories) and because there is no evidence that it will reduce obesity.

Consequently, while we’re pleased to see the chancellor acknowledge the efforts made by soft drinks manufacturers to reduce sugar levels in their products, we continue to believe that implementation of the levy should be paused while such good progress is being made voluntarily.

David Haigh, chief executive of consultancy Brand Finance, said the sugar tax has "undoubtedly" had a negative effect on producers of high sugar content products.

"We calculate that the brand value of Coca-Cola and Pepsi, for example, fell seven per cent and four per cent respectively over the last year, which demonstrates the tangible impact that these changes have had."

Fighting obesity

However, Mark Porter, council chair of the British Medical Association, said experience in other countries show taxation on sugary drinks can improve health outcomes. Porter said the UK needs to go even further by putting restrictions on junk food marketing targeting children and taking action on price promotions.

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