Tax on sugary drinks decision for next government, says Varadkar

A tax on sugary drinks, which has been championed by each of the main Irish political parties, will be introduced in Britain from 2018.

The British sugar tax, which will yield about £520 million (€661.7 million) a year, was the centrepiece of the annual budget statement by chancellor George Osborne.

In a sign of anxiety in London over a “dangerous cocktail” of risks in the global economic scene, Mr Osborne also downgraded the official growth forecast for the British economy for the next five years.

Before Budget 2016, Minister for Health Leo Varadkar had sought a 20 per cent tax on sugar-sweetened drinks as a way of tackling obesity. He believed the measure would result in a 1.25 per cent reduction in obesity, or about 10,000 fewer obese adults.

However, Minister for Finance Michael Noonan ruled out a sugar tax in the October budget.

Only months later a sugar levy was promised in the election manifestos of Fine Gael, Fianna Fáil, Sinn Féin and Labour.

Fine Gael’s levy would raise the price of cans of sugar-sweetened drinks by 10 cent on average from 2018, yielding some €122 million in a full year.

Fianna Fáil’s proposal would increase the price of a can by six cent on average, yielding €71 million. The party also proposed to prohibit TV advertising of food high in fat, salt and sugar before 9pm.

Policy options

A tax on sugary drinks has also been scrutinised in detail by the Tax Strategy Group, the body of ranking officials that prepares policy options in advance of the budget each year. Department of Finance records show officials in the group advised against a tax charged as a proportion of product value in advance of Budget 2016.

Last night, a spokesman for Mr Varadkar said any decision to impose a tax on sugary drinks would be a matter for the incoming government.

“The Department of Health is continuing to pursue a number of initiatives aimed at reducing the levels of overweight and obesity in Ireland, including the proposal for a levy on sugar- sweetened drinks.”

A spokesman for the Department of Finance also said further consideration of the proposal would be a matter for the incoming government.

The introduction of an Irish sugar tax is seen in policy circles to be something of an inevitability, not least because it would add to exchequer revenues at a time when politicians have promised to cut income tax.

The British levy, which was immediately criticised by the soft drinks industry, led to sharp declines in shares of drink and ingredient companies when it was announced by Mr Osborne. It was welcomed by health campaigners.

The British tax will be delayed for two years to give companies time to change their product mix.

There will be two bands: one for sugar content above 5g per 100 millilitres; another for sugar content above 8g per 100 millilitres. Mr Osborne’s office said that the higher rate would apply to drinks including full-strength Coca-Cola, Pepsi and Lucozade Energy.