Tuesday 17 July 2018

EU sweet on €30m sugar tax for Ireland

Stock image
Stock image
Ellie Donnelly

Ellie Donnelly

The European Commission has formally cleared the way for Ireland's sugar tax.

The Commission concluded that the €30m a year levy on fizzy drinks, which comes into effect next month, does not involve State aid.

In a statement issued yesterday, the Commission described the Government measure's scope and design as being "consistent" with its health objectives, namely in the area of tackling obesity and other sugar-related diseases.

Earlier this year, the Irish Government notified the Commission of its plans to introduce a sugar tax in order to obtain legal certainty that the measure did not involve any State aid within the meaning of European Union rules - for example illegally boosting some producers at the expense of others.

While it is the right of Member States such as Ireland to decide on the objective of different taxes and levies, in order to comply with EU State aid rules, member states must design taxes in a way that does not discriminate.

In its assessment, the Commission found that soft drinks can be treated differently to other sugary products under the grounds of health objectives.

The sugar tax will see a levy of 16c a litre for drinks with between 5-8g of sugar per 100ml. It will rise to 24c a litre for varieties with more than 8g of sugar.

When Vat is included, this works out at 20c a litre for drinks with between 5-8g of sugar per 100ml, and 30c per litre for drinks with more than 8g of sugar per 100ml.

The tax is expected to generate €30m in 2018 and €40m in a full year.

Unlike in the UK, where the proceeds of the sugar tax will be directly targeted at improving sport in schools, in Ireland, receipts from the tax will go into the general exchequer.

Coca-Cola said yesterday that it would take a hit in the second quarter of this year from the introduction of a British sugar tax on soft drinks - one of a number of warnings that overshadowed modestly better than forecast results for the first three months of 2018.

The sombre forecast undid an initial rise in shares of the world's biggest drinks maker after it topped forecasts for revenue and profit, helped by a reboot of its Diet Coke brand that has introduced new flavours and cans.

The company said it had reformulated recipes and launched smaller packaging to ensure that two-thirds of its major brands would not be subject to the UK's sugar tax, but Coca-Cola Classic, will still face the levy, which kicked in on April 6.

Irish Independent

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