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The sugar tax: a sweet stocking filler?

by Jack Birch | Analysis

5 December 2016

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Soft drink cans

After several months of waiting, we finally know what the Government’s long-awaited sugar tax will look like.

From George Osborne’s surprise announcement in March, to its confirmation in the childhood obesity plan and recent commitment again in the Chancellor, Philip Hammond’s, Autumn Statement, those following public health have been offered many glimpses at what the sugar tax will cover.

But today is the day that the draft legislation for the sugar tax has been published.

It offers the clearest view yet of how the tax will be designed, and helps us to predict how it might work in practice.

Here are the details.

What is it?

The sugar tax (officially known as the Soft Drinks Industry Levy) is a tax on soft drink companies, rather than taxes such as VAT, which the consumer would normally pay.

And despite being described as a sugar tax, it only applies to sugary drinks – not other products, such as sweets and chocolate, which also contain sugar.

Unlike most taxes, the main aim isn’t to raise the Government money. Instead, it’s aimed at changing people’s behaviour. And what might be surprising is that the tax is aimed at changing the behaviour of the soft drinks industry, not the public.

The goal is to provide an incentive to the soft drinks industry to cut the sugar in its drinks. Changing the recipe (or reformulation as it’s known in the industry) by removing sugar from drinks would mean companies can avoid the tax. And that’s exactly what we want the industry to do.

The sugar tax isn’t law yet but it’s already started to work. Companies are reducing the amount of sugar in their drinks and with the details of the tax published today we can expect many more to follow suit

– Alison Cox, Cancer Research UK

But the companies are also free to decide to take the hit, which could mean that some sugary drinks will become more expensive. The decision lies with them, but we hope that as many as possible will make the right choice.

The Government is yet to confirm the rate the tax will be set at. But companies that make soft drinks containing 5 or more grams of sugar per 100 millilitres will be taxed at a standard rate (whatever that ends up being).

A higher level of tax will apply to drinks that contain 8 grams of sugar or more per 100 millilitres.

The tax focuses on soft drinks with added sugar, like fizzy drinks that have no nutritional value. So fruit juices won’t be affected, nor will drinks that are at least 75% milk or yogurt as they can provide valuable nutrients to children.

Cordials and squashes with a suggested serving that contains  5 or more grams of sugar per 100 millilitres would incur a charge to the manufacturer.

It’s a tax that will be enforced across the UK and is expected to raise about £500m. In England the Government has already said that the money raised from the tax will be used to increase participation in sports in schools, and the range of healthy options at school breakfast clubs.

We hope that any additional money that is allocated to Scotland, Wales and Northern Ireland from the tax is also spent on improving public health.

Why do we support it?

There has never been a stronger case for introducing this tax. Obesity is the second biggest preventable cause of cancer after smoking. And we’ve previously released figures showing that if trends continue there could be around 700,000 new cancers in the UK by 2035 that are linked to obesity.

Childhood obesity rates have also recently reached record highs. This is concerning as an obese child is around 5 times more likely to become an obese adult. So it’s vital that all avenues that could reduce the chances of a child becoming obese are explored. And the sugar tax is one such avenue.

The evidence is clear, consuming too much sugar can lead to people becoming overweight or obese.

We recently calculated that, shockingly, teenagers on average drink a bathtub full of sugary drinks each year. Overall teenagers consume around 3 times the recommended amount of sugar each day, with the main source of this being sugary drinks.


We are certain that the amount of added sugar people consume can be reduced. And one way this could be achieved is through the introduction of the sugar tax.

A number of countries, including Mexico, France, Hungary, and parts of the US, have already introduced a sugar tax. And while it’s too soon to say what impact these taxes are having on obesity, the evidence shows that these taxes in Europe and in Mexico have led to a reduction in sales of these drinks.

And our research suggests that up to 3.7 million cases of obesity could be prevented by 2025 through the introduction of a sugar tax.

What’s going to happen next?

The tax will be debated by MPs in Parliament next spring. If the MPs support it, it will become law later next year. But it will only take legal effect in April 2018.

It’s always hard to predict the exact effect of a new tax or regulation. But there are some things we can expect. And the soft drinks industry has already shown it’s willing to act.

Tesco has already committed to reducing the amount of sugar in its own brand soft drinks, as has the company which owns the Lucozade and Ribena brands.

We expect to see more companies commit to reducing sugar, and expanding their ranges of low and zero sugar drinks before the tax comes into effect.

These steps taken by companies will offer a greater choice of products for us all, letting us choose healthier options much more easily.

It doesn’t stop here

We are delighted that the Government is pressing ahead with its sugar tax. It should lead to reduced sugar consumption and healthier soft drink options – all of which will help tackle the growing obesity crisis.

But the work is far from over. We will be monitoring the tax closely to see how the soft drinks industry responds, the impact on prices and on obesity levels.

There are never easy solutions when it comes to tackling obesity. It’s a complex challenge influenced by a range of factors. The sugar tax is an effective measure, which will reduce the level of obesity.

But it won’t fix obesity alone. That’s why we’re continuing to push Government to remove junk food advertising before the 9PM TV watershed.

Jack Birch is a researcher in the Policy Research Centre for Cancer Prevention at Cancer Research UK