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Sugar tax on soft drink companies announced by Osborne


16 March 2016

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Soft drinks companies will be taxed if they produce drinks with too much sugar in them, George Osborne has revealed.

In a surprise announcement during the 2016 Budget today, the chancellor said that the tax would be introduced in two years' time, so that companies have time to change their recipes accordingly.

The money from the tax – which is estimated by the government to be £520 million – will go towards funding sports in primary and secondary schools.

Soft drinks companies will be taxed if they produce drinks with too much sugar in them, George Osborne has revealed.

In a surprise announcement during the 2016 Budget today, the chancellor said that the tax would be introduced in two years' time, so that companies have time to change their recipes accordingly.

The money from the tax – which is estimated by the government to be £520 million – will go towards funding sports in primary and secondary schools.

In response, David Buck, senior fellow at The King’s Fund, said: “The levy could be a helpful addition to the UK’s approach to addressing obesity, but details need to be ironed out. To have most impact, it will need to be at a sufficient level to change behaviour, be well designed and targeted, and be part of a broader strategy on obesity.”

The amount that companies are taxed will depend on the amount of sugar in their drinks and how many drinks they produce or import. Pure fruit juices and milk-based drinks will be excluded.

There will be two bands, Osborne announced – one for total sugar content above 5g per 100ml. A second band is for the most sugary drinks, with more than 8g per 100ml.

However, not everyone is as pleased with the tax, as Gavin Partington, director general of the British Soft Drinks Association said: “We are extremely disappointed by the government’s decision to hit the only category in the food and drink sector which has consistently reduced sugar intake in recent years – down 13.6% since 2012…

“By contrast sugar and calorie intake from all other major take home food categories is increasing – which makes the targeting of soft drinks simply absurd.”

The government will now consult on the implementation of the tax.

The chancellor also announced the abolition of business rates for small businesses, which could result in a £7 billion loss in revenues, a third of business rate revenues, Buck added.

“Public health spending is going to fall by at least £600 million in real terms by 2020/21, on top of £200 million cuts this year, so it is essential that this does not result in further cuts to public health budgets in future,” he added.

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