Government warned over fat-tax fallout

A fat or sugar tax would have no effect on obesity levels and would only encourage people to do their weekly shopping in Northern Ireland, the representative body for food and drink companies has warned the Government in its pre-budget submission.

Food and Drink Industry Ireland said obesity taxes were regressive and academic research into food taxation was inconclusive. "Denmark has had discriminatory taxes on certain products since the 1930s and still has seen increasing obesity rates," the submission stated.

Denmark introduced a further tax on saturated fat levels within products in 2011 but repealed it the following year because of concerns about competitiveness, job retention and cross-border trading.

Increased
The submission also noted that obesity rates had continued to increase while the consumption of soft drinks had fallen. It said Ireland already had a high tax regime on certain foods including beverages and some confectionary items.

“While the vast majority of foods in this country are zero rated, the standard rate of 23 per cent VAT applies to confectionary items such as sweets, chocolate, crisps, ice-cream and soft drinks. For instance, given the proximity of the Border with Northern Ireland, consumers would be encouraged to avoid the tax by doing their weekly grocery shopping in the Border towns.”

The submission also said a fat or sugar tax would have a disproportionate impact on low-income families who spent a higher proportion of income on food.

Disadvantaged
The latest findings from the Growing Up in Ireland study published last week found that children from more disadvantaged families were more likely to be obese than children from wealthier backgrounds.

Nine per cent of children living with parents who never worked were classed as obese, compared with 5 per cent of children in higher social classes.

The food and drink body also asked the Government not to increase VAT or excise duty on its products, saying that while the level of cross-Border shopping was not as high as it was in 2009 "the Irish retail market remains highly sensitive to future indirect tax and currency changes".

Raw materials
The submission also asked the Government for measures to ensure access to increased volumes of high-quality raw materials for the food industry. It highlighted the need for improved access to finance and said the Government should focus on maintaining cost competitiveness, particularly in areas such as energy.