Dr Mike Rayner and Dr Peter Scarborough of the Oxford Martin Programme on the Future of Food discussed the recently-announced tax on sugary drinks.
The Budget announcement of a soft drinks industry levy is indeed welcome news. As Jamie Oliver says, this was a ‘symbolic move’ which won’t by itself fix childhood obesity but signals the determination of the Government to tackle this serious health problem. It’s a move that will be closely watched around the world by other governments, public health bodies and of course food and soft drink companies. A tax on sugary drinks at some point was, in our view, inevitable. And if it was going to be introduced by any government this had to be in the first half of its term in office. So perhaps the timing of the announcement is not so surprising.
George Osborne’s proposal for how he intends to implement a tax is interesting because rather than being a sales tax that directly raises the price of sugary drinks (as, has been advocated by most public health bodies in the UK to date and is how a sugary drinks tax has been applied in a few other cases around the world) it is instead a tax levied on the manufacturers. From April 2018, soft drink companies will be required to pay 18p for every litre of sugary drink with 5-8g sugar per 100ml that they sell in the UK, and 24p for every litre with over 8g sugar per 100ml. For comparison, a Coca-Cola contains 10.6g sugar per 100ml.
The levy’s introduction in two years’ time is designed to give soft drinks companies enough time to reformulate their products and change their product mix. Once introduced, it will be then up to the company to decide how they change the price of their taxed (and untaxed) products, if at all and so the major question that has arisen since the Budget announcement is, ‘Will the tax actually lead to an increase in the price of sugary drinks?’ This is because the main purpose of a sugary drinks tax should, in our view, be to reduce the consumption of sugary drinks through increasing their price, rather than to raise revenue.
The finer details of the tax will be consulted on over the coming summer months. It will be interesting to see what happens next, but not just interesting. The implementation, and indeed the evaluation of the impact of the tax, should be closely watched by all concerned with the public’s health both here and abroad.
- This commentary was originally published on the Oxford Martin Programme on the Future of Food website