How much is the UK public willing to pay for sweetened soft drinks?
The draft Finance Bill 2017 was published on Monday, 5th December. Not normally associated with health and nutrition news, this year, the introduction of the soft drinks levy has definitely hit the newspaper headlines. Still awaiting the finer details, the draft does provide further insight and confirms the details announced during the 2016 budget announcement. Out for comment, it will be interesting to see how industry reacts with many of the big players already making huge reformulation changes to ensure the few of their products are taxable.
So what is in the draft Finance bill?
All soft drinks which contain 5g or more of added sugars per 100ml will be in scope of the tax. This will also include alcoholic drinks of ABV up to 1.2%.
• Smallest manufacturers and importers of the smallest producers abroad.
• Soft drinks containing less than 5g added sugars per 100ml or no added sugars drinks.
• Drinks classified as ‘Foods for Special Groups’ which includes baby foods and formulae.
• Sugar containing milk-based drinks with a minimum of 75ml of milk per 100ml.
• The new trend of plant-based milk alternatives is also exempt as long as they are a source of calcium.
• Alcohol substitute drinks.
Transition period until April 2018 – providing reformulation time for all industry.
The two sugar thresholds still remain:
Products with 5-8g added sugars will be taxed at a lower level than those providing 8g or more of added sugar per 100ml.
The exact tax level has yet to be defined, but according to the Guardian Monday 5 December headlines, the levy would increase the cost of a 1L bottle of soft drink containing 5g sugar per 100ml by 18p and those containing 8g and more of sugar per 100ml by 24p.
Policy objective is to reduce childhood obesity through the reduction of total calories by removing additionally calories consumed via added sugars within soft drinks. It hopes to raise in excess of £500 million in the first year which they have promised to invest in physical activity for children.
The government wants to encourage industry to reduce sugar levels by:
• Reduction in portion size
• Import of lower sugars / reformulated drinks
Economic impact (Estimated by the Office for Budget Responsibility). Based on estimates made in 2016:
The levy will add a quarter of a percentage point to CPI growth in 2018 and 2019.
It is believed that the health of the nation will be significantly improved especially with a reduction of obesity related diseases e.g. diabetes type 2.
The main reason for the sugar focus is that it is seen as additional excess calories.
Impact on industry.
The government believes that 300 UK producers will need to register for the levy and the impact on their business should be negligible. However, the Coca Cola representative’s view at the All Party Parliamentary Group on Adult & Childhood Obesity Meeting on the 5th December, had a different opinion stating that the average cost per reformulation was in the range of £½million and that smaller manufacturers would not be able to absorb this cost.
Operational impact (HMRC costs): there will be a one-off capital costs to develop the system for tax collection and on-going resources costs for HMRC to implement this change and monitor compliance.
An additional comment made by at the All Party Parliamentary Group on Adult & Childhood Obesity Meeting on the 5th December, was that the government had yet to demonstrate clearly if this sugar tax will have a significant impact on obesity.