Tax & admin · 17 August 2016

Small business bodies unite to urge government to scrap sugar tax

fizzy drinks
The planned sugar tax could be as high as 20 per cent of the sale of a soft drink

Organisations representing thousands of UK small business owners and workers have joined a campaign calling for the government to scrap the so-called “soft drink tax”, before it launches a consultation.

Backed by a large coalition of UK businesses, the ‘Face the Facts, Can the Tax’ campaign has identified the damaging economic impact of the planned sugar levy – introduced as a measure by former chancellor George Osborne in his March 2016 Budget – on the soft drinks industry.

Bringing together soft drinks manufacturers, distributors, vendors, newsagents, small shop keepers and owners of bars, restaurants and pubs, the campaign is supported by the National Federation of Retail Newsagents, the British Soft Drinks Association and the Federation of Wholesale Distributors, among other bodies.

The campaign claims that the tax – which could be as high as 20 per cent of the sale of a soft drink – would result in the loss of over 4,000 jobs, and £132m in UK productivity, once coming into force after April 2018.

Introduced by former chancellor George Osborne in his Budget announcement in March 2016, the initiative saw plans for a levy on soft drinks with more than five grams of sugar per 100ml to combat rising levels of obesity in Britain.

However, the campaign, supported by findings of a recent soft drinks industry report from Oxford Economics, has suggested only marginal gains would be made in tackling poor health in the UK as a result.

Oxford Economics predicted that calorie consumption would decrease by an average of just five calories per person per day after the introduction of a sugar levy – the equivalent of one bite of an apple.

At the same time, the report claimed that “full sugar” soft drinks now accounted for less than 3 per cent of calories in the daily diet of the average Briton, with sales figures for these drinks falling by as much as 44 per cent in the last ten years.

Director general at the British Soft Drinks Association – one of the organisations funding the campaign  – Gavin Partington – recently told the Guardian newspaper: “We absolutely agree with the government that obesity levels are too high and action is needed, but burdening businesses and consumers with an ineffective tax is not the answer.”

The launch of the campaign after key industry body, the UK Food and Drink Federation, encouraged the government top delay plans to introduce the sugar tax in the wake of the Brexit vote.

Industry heavyweight Leendert den Hollander – Coca-Cola’s UK boss – also recently hit out at the government’s plan. Referring to the levy’s likely impact on obesity, den Hollander said: “We don’t believe the sugar tax is the right thing to be done. We are not debating the issue, we are debating the solution. The facts don’t suggest that a sugar tax works to change behavior”.

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ABOUT THE EXPERT

Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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