Photo credit: www.bbc.com
Plans are underway for the expansion of the sugar tax, initially applied to fizzy drinks, to include milkshakes and other milk-based beverages under new government initiatives.
Currently, the government is seeking public input on the proposed removal of the tax exemption for dairy drinks, as well as non-dairy alternatives such as oat and rice-based beverages.
Chancellor Rachel Reeves emphasized the government’s intention to expand the levy during her autumn budget presentation last year.
Formally recognized as the soft drinks industry levy (SDIL), the sugar tax targets beverage manufacturers and was first implemented by the Conservative administration in April 2018, aiming to address the issue of rising obesity rates.
As part of their recent announcements, the Treasury confirmed plans to reduce the threshold for sugar content in beverages subject to the tax from 5g to 4g per 100ml.
According to government analyses, around 203 pre-packaged milk-based drinks, which account for 93% of sales in that category, will incur the tax unless their sugar levels are decreased in line with the new proposals.
The exemption for dairy drinks was initially instituted due to concerns about calcium intake, particularly among younger demographics.
The Treasury’s data indicates that young individuals receive merely 3.5% of their calcium from these beverages, suggesting that “the health benefits may not outweigh the risks associated with excess sugar consumption.”
The Treasury stated, “Incorporating milk-based and milk substitute drinks into the SDIL would incentivize manufacturers to build on existing improvements and further reduce sugar content in their products.”
Government estimates reveal that 89% of soft drinks in the UK do not fall under the tax, largely due to extensive reformulation efforts by manufacturers since the levy’s inception in 2018.
However, the government acknowledged that the levy has established a “target” just below the 5g limit, leading to a concentration of products right under this threshold.
The consultation process is set to be open until 21 July.
Since its rollout in 2018, the SDIL has generated approximately £1.9 billion for the government, with £338 million collected in revenue for HMRC in the 2023-24 financial year according to statistics released in September.
In recent years, the levy has faced criticism from various stakeholders, including the soft drinks industry, pubs, and off-licenses, who argue that it disproportionately impacts lower-income families while failing to effectively combat obesity.
Regarding the latest proposals, the Food and Drink Federation has expressed its willingness to contribute insights during the consultation.
The Federation noted that “substantial advancements” have been achieved, citing a 46% reduction in sugar in soft drinks over the past five years, as well as a 30% decrease in sugar content for pre-packaged dairy beverages in the last three years.
It also highlighted the inflationary challenges facing food and drink manufacturers, urging the government to foster a conducive environment for innovation and to clarify long-term objectives to bolster business confidence.
Source
www.bbc.com