Wednesday 16 January 2019

€30m sugar tax won't be ring-fenced to fight obesity 'time bomb'

Funds raised by the sugar tax won’t be used to fight obesity. Stock picture
Funds raised by the sugar tax won’t be used to fight obesity. Stock picture
Eilish O'Regan

Eilish O'Regan

The €30m sugar tax on fizzy drinks, which comes into effect next month, will not be ring-fenced to tackle Ireland's obesity 'time bomb', it has been confirmed.

The funding will go into the general Exchequer - unlike the UK where the proceeds of the tax will be directly targeted at improving sport in schools.

The Department of Finance said reserving a tax for a particular purpose is "not a feature of the Irish tax system in general".

A spokesperson said it reduces the flexibility of the Government to prioritise and allocate funds as necessary at a particular time.

Asked to explain then how the proceeds of the plastic bag charge go to waste management, she said "it is a levy and not a tax". It is operated by the Department of the Environment and collected by Revenue on its behalf.

One in four Irish children who are the main target of the tax is overweight or obese.

Irish consumers will notice the difference in higher prices when high-sugar drinks become more expensive. The tax, which was due to begin on April 6, is to be implemented from May 1 instead to allow for full approval from the EU.

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

When VAT is included this works out at 20c per 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.

An Irish Independent survey of a sample of products shows the tax will add between 14c to 45c to the price of various sugary drinks.

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

But the predicted takings for the Exchequer may take a hit as more drinks companies reformulate products and reduce sugar content. Drinks which have had their sugar content reduced include Ribena, Lucozade, Orangina and V Energy.

Consumers who are watching their calories should bear in mind, however, they will still contain more than one spoonful of sugar.

Ribena drinks will now have under 5g of sugar per 100ml bottle, which means they will not be subject to the tax. Fanta and Sprite, which have also seen their sugar levels stripped, will also be exempt from the sugar tax.

However, a spokeswoman for Coca-Cola said its flagship classic coke will remain unchanged. Coca-Cola Classic contains 10.6g of sugar per 100ml and will be subject to the tax.

A new range of Coca-Cola pack sizes will be in shops "to ensure consumers continue to have clear and simple choices when it comes to choosing the drinks they want to buy".

The cost varies per shop but the price survey showed a large Coke bottle, which up to now was 1.75 litres in size, is priced at around €2.15. It will be replaced by the smaller 1.5 litre bottle, priced around €2.41. Coca-Cola Classic will be available "in smaller, more convenient pack sizes to ensure that they remain affordable," said the company.

Irish Independent

Editor's Choice

Also in Irish News