Soft Drinks Tax: is the UK moving in the right direction?

Soft Drinks Tax: is the UK moving in the right direction?

Christopher Snowdon on The Spectator highlights the counterfactual evidence against the three main claims used by the UK Treasury to justify the introduction of a of the Soda Tax in 2018, as announced by former chancellor George Osborne earlier this year.

According to the Treasury’s the tax will only affect corporate profits, not consumers; yet the author contends that consumers, not companies, will be the most affected. While he recognizes that companies are not forced to raise the prices of their products, he points out that the national Office for Budget Responsibility (OBR) expects the levy “to be passed entirely on to the price paid by consumers”.

The second claim is that the tax will incentivise large-scale sugar reduction in soft drinks; Snowdon denounces that “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”. He argues that the soft-drink industry already provides low and no-calorie alternatives of their products, suggesting there is little room left for further reformulation. The amount of sugar consumed through beverages solely depends on consumers’ preferences.

The third claim presents the tax as the best way to raise money for anti-obesity initiatives. According to the OBR the levy will raise £500 million a year, yet it requires a cost of £1 billion for its implementation alone, enforcement costs and the rise of index-linked salaries, benefits, and public sector pensions are on top of that. Phil Wadsworth, chief actuary at JLT Employee Benefits, estimates that the sugar levy will add £3 billion to UK pensions liabilities. Snowdon warns that any revenue generated by the levy will have no other purpose than to cover its costs for many years to come.

Snowdon concludes with an appeal “the sugar levy aims to do something that has already been done (reformulation of soft drinks) with a tax that will lose the government money… a rethink is urgently needed”.

You may find the original article on The Spectator website

UK Sugar Tax expected to cause significant job losses

UK Sugar Tax expected to cause significant job losses

London’s business focused newspaper City A.M. reports the results of a study conducted by the think tank Taxpayer’s Alliance on the impact of the UK sugar tax. Announced by former UK chancellor George Osborne earlier this year the levy, which specifically target soft drinks, is set to enter into force in 2018.

TPA calculated that the levy could lead to an estimated loss of 5’624 jobs for the UK market, equivalent to over £90 million in average industry and associated sector wages. This would consequently lead to a loss for the Treasury of over £17 million in job-related taxes, namely employee’s National Insurance contributions and Income Tax, and employer’s National Insurance contributions. TPA Chief Executive Jonathan Isaby warned: “Not only will the sugar tax fail in its public health aims, there is a very real risk that it will destroy jobs and harm economic growth. Given it will also hit the poorest households the hardest, the already flimsy case for a sugar tax is rapidly dissolving”.

The expected impact of the UK sugar tax was calculated on the outcomes of a similar levy introduced in Mexico in January 2014, which caused an estimated loss of 10’815 jobs since its introduction, but only led to a reduction in daily consumption of a mere “10 millilitres per day or 4.6 calories … the equivalent to a bite of an apple 5% of a slice of Tesco wholemeal bread or 2.3% of a can of Heinz Tomato Soup”, as previously reported by The Sun.

You may find the full article by Francesca Washtell on the City A.M website

You may also find The Sun article by Steve Hawkes on The Sun website

UK Sugar Tax Faces Criticism from Consumers’s Organizations

UK Sugar Tax Faces Criticism from Consumers’s Organizations

The Sun reports that the UK sugar tax, set to enter into force in April 2018, is facing rising opposition which questions both its merits and its design.

Taxpayers Alliance is criticizing the Government for the introduction of a regressive tax that will raise the cost of living for those less well-off families that endure a daily struggle against tax bills. Drawing from the Mexican precedent the citizens’ association calls out the ineffectiveness of such a measure: in 2014 Mexico introduced a tax on fizzy drinks which led to a reduction in daily consumption of some mere 5 calories, as much as five percent of a slice of wholemeal bread.

Taxpayers Alliance chief Jonathan Isaby said: “It is astonishing that the government is pressing ahead with this pernicious tax when the evidence clearly suggests that it will simply not affect consumption in any meaningful way.”

The Alliance accuses UK’s Councellor George Osborne of pursuing Nanny State policies and demands for the initiative to be revoked.

Lawyers consulted on the matter argue that the tax might be blocked by European courts on discriminatory grounds – given the high sugar drinks such as milk-based and coffee-based beverages are exempt from the duty.

You may find the full article by Steve Hawkes on The Sun website.

UK Sugar Tax may aggravate the struggle against diabetes

UK Sugar Tax may aggravate the struggle against diabetes

An article from the BBC warns the public about the collateral effects of the UK sugar tax, announced by the Government this March it should see daylight starting April 2018.

According to the UK’s own national broadcasting service the Government’s new measure will negatively impact a share of the British population that already struggle with a life-threatening condition: type 1 diabetes. People affected by type 1 diabetes are at risk of suffering from complication due to hypoglycemia, an insufficient level of blood glucose, which can lead to a diabetic coma. To prevent this from happening diabetics compensate by increasing their intake of sugar; the BBC reports that typically this is done by consuming sugary beverages.

The interviews conducted by the BBC and reported in the article cast a light on the detrimental impact of the tax on the purchasing power the families of diabetics. As a concerned parent commented «the sugar tax will mean keeping my son alive just got a lot more expensive».

The chief executive of Diabetes UK Chris Askew voices the widespread concern among diabetics about the sugar tax, stressing that the introduction of the measure in its current form will «adversely impact on the way people manage their condition» and reminding that type 1 diabetes «is not linked to lifestyle and cannot be prevented».

You may find the original article on the BBC website.

German Food Minister Schmidt says no to UK Sugar Tax

German Food Minister Schmidt says no to UK Sugar Tax

According to an article from Die Welt the Federal Minister of Food, Christian Schmidt (CSU) rejects a tax on sugary drinks on the model of the one announced by the British Government on March 16 2016. The Ministry spokesperson reminded that previous tax attempts in the EU did not achieved the desired results, instead they have been very costly to implement and manage.

Detlef Groß, president of the German association for the non-alcoholic beverages, recognizes that «obesity is a complex phenomenon», one that cannot be stopped by a one-sided discriminatory tax on a single product category. Mr. Groß also reminded that soft drinks accounted for only a small part of the daily caloric intake as the the sector offers consumers a wide range of options, both with and without sugar.

The Ministry seems is on the same page as it states that taking action on soft drinks alone would be irrelevant; instead it envisions a holistic approach, stressing that people has to be convinced to pursue a healthy lifestyle, rather than forcing them to change their habits through legal constraints. According to the Ministry the key to healthy practices is in the school system which should educate and inform the population since childhood in order to foster “nutritional competence”. At the same time the Federal Government created a €2 millions research fund to study the reduction of salt, sugar and fat in processed food.

Please find the original article on Die Welt website.

UK “anti-consumer” Sugar Tax could cost £1 billion to set up

UK “anti-consumer” Sugar Tax could cost £1 billion to set up

In a recent article Brook Whelan from the Huffignton Post takes a closer look at the effects on the UK economy of the freshly brewed “sugar tax”, which was designed and announced by the British Government on March 16 2016 and should be put in place two years from now, in April 2018.

Whelan describes the tax as an « anti-consumer and anti-business » measure. Although he recognizes obesity to be an issue of concern, he argues that in its current form the tax is just a “gimmick” that fails to address the problem. On top of that he criticises the measure for curbing the consumer’s’ freedom of choice.

Whelan estimates that the set up costs of a sugar tax would constitute a £1 billion burden on the state finances, a « scandal » and a « complete shambles » he says, asserting that the money could be better spent elsewhere in the health service.

The articles concludes with an appeal to Chancellor Osborne and the Government to do a U-turn and scrap the tax before its implementation, recalling the pastry tax precedent.
The original article is available on the Huffington Post website.