Sugar tax: cost, drinks affected and more

Nanny state or good health policy, the sugar tax has arrived. It's a bit of a minefield, with some sugary drinks excluded while some surprising beverages have been thrown in. We look at what's changed and what it'll mean for your pocket.

From today (6 April), a new sin tax is being introduced, one designed to nudge shoppers away from sugary soft drinks and towards healthier options and to make drinks firms drop their sugar content.

The Soft Drinks Industry Levy, which rightly or wrongly has become known as the ‘sugar tax’, is a first for Britain and it is going to change the price of many full-sugar popular drinks.

Unlike other sin taxes, this one is being levied against manufacturers rather than customers.

The Treasury has been keen to stress that this is not a tax on the people who drink the drinks.

It’s stated clearly: “This is not a tax on consumers.

“The Government is not increasing the price of products; companies don’t have to pass the charge on to their customers. If companies take the right steps to make their drinks healthier they will pay less tax or even nothing at all.”

However, not everyone is convinced that customers won’t be hit by higher costs. So what is the sugar tax, what products are affected and how much is it going to cost you?

We’ve been taking a look.

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What is actually affected?

Despite the popular ‘sugar tax’ name, this is not a widespread tax on all sugary products. Not yet, anyway.

From today, drinks that are more than 5% sugar will face an 18p levy per litre, while those containing more than 8% sugar will be hit with a 24p-per-litre levy.

However, the levy will not be charged against pure fruit juices, even though they may have high sugar content, as they do not have added sugar.

And drinks with high milk content will also be exempt as they contain calcium and other nutrients.

So, high sugar cola drinks will be affected but high sugar orange juices or high sugar chocolate milk – as long as it contains at least 75% milk – won’t pay the levy.

Some politicians have called it the ‘fizzy drinks tax’ but low-calorie alternatives won’t be hit as they rely on sweeteners rather than sugar.

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Why soft drinks particularly?

To anyone who has recently seen a sweet counter at their local newsagents, taxing fizzy drinks may seem like a weirdly specific target – almost like choosing to target rolling tobacco over cigarettes when they are both essentially the same for your health.

However, the Government has said there are good reasons for targeting drinks specifically.

There are nine teaspoons of sugar in a 330ml can of cola, which instantly takes children above their recommended maximum sugar intake for the day.

A five-year-old shouldn’t have more than 19g of sugar in a day and a typical can contains 35g.

Public health experts from the Chief Medical Officer to the British Heart Foundation have argued that sugar-sweetened soft drinks are a major source of sugar for children and teenagers and that sugar intake drives obesity.

What’s more, many soft drinks have simply no intrinsic nutritional value and could be reformulated to contain less sugar.

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Will I pay more for pop?

Very likely yes. The Treasury may have said that there’s no demand for manufacturers to pass the cost on but the reality is that they almost certainly will.

Passing the cost of production onto the consumer is simply how business works.

Back in 2016 the Office for Budget Responsibility said pretty explicitly that the cost is going to be paid by the consumer.

It wrote: “On the basis of the Government’s revenue target for this levy, this implies rates of 18 pence or 24 pence per litre unit charge according to sugar content, which we expect to be passed entirely onto the price paid by consumers.”

Unless big drinks manufacturers are about to reveal an updated recipe with less sugar then prices are going to climb.

A two-litre bottle of Coca-Cola, for example, could rise in price by as much as 48p, while cans of high-sugar fizzy drinks will likely cost between 6p and 8p more.

Even mixers like tonic water could jump in price, depending on their ingredients.

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Will the sugar tax work?

That depends on who you ask. Other countries have achieved some success with their sugar taxes on drinks, with some seeing vast reductions in the litres of sugar pop sold and others seeing considerable decreases in the amount of sugar being added to the products.

However, this tax has been criticised for hitting the poorest hardest and for simply missing out many sugary drinks because they are fruit-based.

After all, orange juice and fruit smoothies may not have added sugar but the fruit sugar content can still be as high as 8% or more.

There has also already been a steady decrease in the amount of high sugar fizzy drinks consumed in the UK, with many people already switching to low or zero-sugar alternatives.

However, there has been no corresponding decrease in obesity – in fact, average weights have increased.

The Institute of Economic Affairs (IEA) says that low or no-sugar drinks make up half the market while regular Coca-Cola and Pepsi make up a further quarter of the market.

Those big two manufacturers are very unlikely to change their sugar content after previous outcries when they tried to update the recipes of their flagship brands

So three-quarters of the market can’t respond and the industry has already worked to increase its range of diet alternatives, according to the IEA.

The IEA is scathing about the plans, stating: “The Government has picked on the one part of the food and drink industry that has undergone extensive reformulation and told them to somehow do it all over again.

“It’s not going to happen because it is physically impossible for half the market and commercial suicide for most of the other half.

“The result will be that the Government makes more money from the levy than it predicted…

“Governments have to raise money somehow and whilst there is no particular reason to target fizzy drinks rather than any other non-essential product, politicians would be more credible if they said openly that they have a budget shortfall and that soft drink taxes are a convenient way of getting money out of people on low incomes without upsetting the liberal left.”

Ouch.

What do you think? Will this raise taxes or drive healthier choices? Is it fair? What could it cost you? Have your say using the comments below.