UK. Sugar tax could mean rise in general taxation, pressure group claims

05.12.2016

The Government is expected to unveil plans for taxes on sugary drinks, amid warnings from critics that the levy could end up resulting in higher general taxation or a rise in borrowing.

The Treasury is expected to announce plans for taxes on sugary drinks which are forecast to raise £520m a year - following promises that funds raised will be spent on sport in primary schools.

But critics said the estimates are not reliable - and suggested the public could end up having to find extra money to ensure school sports are not left cash-strapped.

Today the Treasury is expected to reveal the details of a levy on soft drinks, which was first pledged in George Osborne’s last budget. Then, estimates suggested it could add up to 8 pence to a can of fizzy drink - or 24 pence a litre - for the most sugary drinks.

Mr Osborne said the funds raised by the levy would be “tied directly” to funding sport in school, as part of a wider efforts to improve children’s health

Last month a study found teenagers are drinking the equivalent of almost a bath full of sugary drinks every year, while those under the age of 10 are having half as much.

Health campaigners have welcomed the idea of a sugar tax, saying that slowing sales of sugary drinks is crucial to “turning the tide” on obesity, which is now at record levels among children.

But a new report by the Taxpayers’ Alliance has criticised the idea.

It says any shortfall in revenues from the tax - which could occur if the public turns away from sugary drinks - could leave holes in school budgets which need to be plugged.

The report says a 20 per cent shortfall in revenue is equivalent to a 1 per cent increase in inheritance tax.

It also highlights previous warnings that the sugar tax could result in a 0.25 per cent increase in the consumer price index, increasing the cost of interest payments on government borrowing.

And if such taxes bring in more money than is expected, claims that the levy is being “tied directly” to child health could be undermined, the report says, as ministers would be free to spend extra funding as they liked.

John O'Connell, chief executive of the pressure group, said: "This new research just adds to the weight of evidence that shows the sugar tax is an ill-thought-out reaction to pressure from the those in the public health lobby. Lasting change will happen via a long-term cultural shift, not by burdening the poorest families with a higher cost of living.

Health campaigners said such measures were needed to protect the public from the “devastating” consequences of a deadly obesity epidemic.

A spokesman for the Obesity Health Alliance, a coalition of more than 30 leading health charities, campaign groups and Royal Medical Colleges said: “We’re pleased to see the government move forward with the Soft Drinks Industry Levy which is a necessary measure to help decrease our sugar intake, and reduce the burden of obesity and its devastating health complications.”

He added:  “Sugary soft drinks are currently the largest source of sugar for children, and this high sugar intake is driving the deadly obesity epidemic which costs our health service billions of pounds every year. Tackling obesity today will save money tomorrow."

The British Dietetic Association also welcomed the plans, which are due to take force from April 2018.

Andy Burman, BDA chief executive, said: “The sugar tax is not enough on its own to solve the crisis of childhood obesity, but is a positive move in the right direction, and an important sign of intent from the government.”

“The BDA will continue to work with the Department of Health and Public Health England to support other areas, such as product reformulation, and will push the government to further strengthen its childhood obesity plan of action.”

telegraph

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