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Reilly plans 10pc sugar tax on soft drinks

HEALTH Minister James Reilly was today considering a plan for a 10pc excise tax hike on fizzy drinks -- just as Denmark decided a "fat tax" doesn't work.

A confidential reported commissioned by the Health Minister recommends increasing the excise duty on soft drinks, which are already subject to a 23pc VAT rate.

A 10pc rise in excise duty could see drink jump by up to 20c a bottle.

The aim is to curb obesity and raise revenue.

The Institute of Public Health In Ireland report, which will be presented to the Department of Health's obesity committee today, stops short of seeking the introduction of the "fat tax" that has been introduced in some other European countries.

The Department's special action group on obesity will decide on whether to recommend the price increase, but the report is understood to say that "on balance", it should go ahead.

If the minister decides to seek the increase, he might take note of Denmark, which introduced a tax in October, 2011 on food containing more than 2.3pc of saturated fat.



abolish

Now Denmark is to scrap the tax after it said it was costly and failed to change people's eating habits.

Now it is to abolish the "fat tax" and cancel the planned sugar tax.

If the Health Minister decides he now has the evidence to ask Finance Minister Michael Noonan to impose the increase in next month's Budget, it will push up the retail price of soft drinks, with consumers paying a third on top of the pre-tax price.

A bottle of lemonade which would cost €2 without tax is already subject to VAT at 23pc, pushing up the price to €2.46.

A further 10pc in sugar tax would add another 20pc to the cost at the till, meaning shoppers would end up paying €2.66 for the same bottle.

The biggest impact of a tax increase would be felt by the young and lower income groups who are the biggest consumers of soft drinks.

Figures show that 60pc of the adult Irish population and almost a quarter of seven-year-olds are either overweight or obese.

France has led the way with a sugar tax.

mlavery@herald.ie


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