TaxCorporate TaxBudget 2016: Bittersweet budget paves the way for sugar tax

Budget 2016: Bittersweet budget paves the way for sugar tax

Levy will apply to drinks with total sugar content above 5 grams per 100 millilitres, with a higher rate for more than 8 grams per 100 millilitres

GEORGE OSBORNE has bowed to pressure from the World Health Organisation by introducing a levy on sugary drinks from 2018.

The chancellor used the budget to tackle the UK’s growing childhood obesity crisis by declaring that from April 2018, soft drinks companies will pay a levy on drinks with added sugar. Osborne failed to specify how much the levy would be.

“The levy will be designed to encourage companies to reformulate by reducing the amount of added sugar in the drinks they sell, moving consumers towards lower sugar alternatives, and reducing portion sizes,” states the budget document.

The levy will apply to drinks with total sugar content above 5 grams per 100 millilitres, with a higher rate for more than 8 grams per 100 millilitres.

Money raised from the levy will be used to double the primary PE and sport premium (the additional money schools have to spend on PE and sports) to £320m a year.

The announcement has already had an effect on sugary drinks companies, with stocks of Britvic, Tate & Lyle and Barr all falling.

This announcement follows a report released by the World Health Organisation this year that suggested Britain introduce a 20% levy on all sugary drinks.

Osborne also froze fuel duty, a major surprise for many who thought Osborne would raise the duty, but he did announce a 2% increase in tax on cigarettes and 3% on rolling tobacco. The chancellor also kept the tax status quo on beer, cider and whisky.

The news has been welcomed by celebrity chef and health campaigner Jamie Oliver, who last year urged ministers to enforce a 20% tax on all sugary drinks.

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