Introduction to Sugar Tax
The government is considering expanding the sugar tax to include milkshakes and lattes. This move is part of new plans to combat obesity. The sugar tax, also known as the Soft Drinks Industry Levy (SDIL), was introduced in 2018 and applies to manufacturers of sugary drinks.
Current Exemptions
Currently, milk-based drinks and non-milk substitutes such as oats or rice are exempt from the tax. However, the government is now consulting on ending this exemption. The Chancellor announced last year that the government was considering expanding the levy. The Shadow Chancellor has described the move as a "sucker punch" to households.
How the Sugar Tax Works
The SDIL applies to manufacturers and was introduced as a means of combating obesity. The tax is levied on drinks that contain more than 5g of sugar per 100ml. The government is now proposing to reduce this threshold to 4g per 100ml.
Impact on Milk-Based Drinks
Around 203 milk-based drinks on the market would be affected by the tax, unless their sugar content is reduced. The exemption for milk-based drinks was initially introduced due to concerns about calcium consumption, particularly in children. However, the government has found that young people only get 3.5% of their calcium intake from these drinks.
Government Proposals
The government estimates that 89% of soft drinks sold in Great Britain have been reformed to avoid the tax since 2018. However, the levy has created a "cliff edge" effect, with products being reformulated to just below the 5g threshold. The government is now proposing to introduce a tax incentive for manufacturers to reduce sugar in their recipes further.
Consultation and Revenue
The government consultation will run until July 21. The SDIL has collected a total of £1.9 billion since its introduction in 2018. The revenue from the levy for the 2023-24 financial year was £338 million.
Reaction to the Proposals
Tam Fry, the chairman of the National Obesity Forum, has welcomed the proposals, saying it is "high time" the levy was extended. The Food and Drink Federation has said it welcomes the chance to share its views in the consultation and has highlighted the significant progress made in reducing sugar in soft drinks in recent years. However, the federation has also asked the government to create the right conditions for companies to innovate and invest in research and development.
