Wednesday 26 October 2016

Noonan warned against sugar tax over concerns for soft drink multinationals - despite potential €134m tax windfall

John Brennan

Published 22/12/2015 | 08:30

Michael Noonan. Photo: Frank McGrath
Michael Noonan. Photo: Frank McGrath
Leo Varadkar. Photo: Damien Eagers

Minister for Finance Michael Noonan was warned off introducing a sugar tax by both officials in his department and the Revenue Commission.

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Fears that a sugar tax could potentially drive soft drink multinationals out of the country as well as push retailers across the border to buy their beverages and dodge the tax.

Prior to October’s budget, Minister for Health Leo Varadkar wrote to Minister Noonan urging him to introduce a 20pc sugar tax on sweeten soft drinks to help tackle spiralling obesity.

This measure has not been introduced to date.

It has been revealed, however, that the Department of Finance was actively considering the proposal, and had done considerable research on its implications.

It found that a 25c increase on a litre of soft drink would add about 10c to the cost of a can of premium cola, and would raise an estimated €134 million in additional tax for the State.

Leo Varadkar. Photo: Damien Eagers
Leo Varadkar. Photo: Damien Eagers

These documents were released under the Freedom of Information Act to RTE News.

The Revenue Commissioners advised the Department of Finance not to introduce the measure because of the high risk of tax evasion through soft drinks purchased in Northern Ireland and sold in the Republic.

Minister Varadkar said that a 20pc tax on sugar sweetened drinks would result in a 1.25% reduction in obesity – equivalent to about 10,000 adults.

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