Introduction of sugar tax on soft drinks labelled as 'classic political move'

The UK government announced plans to introduce a 'sugar tax' in 2018, while at the same time revealing it will reduce corporation tax on multinationals.

Chancellor George Osborne introduced the tax as part of his Budget 2016 announcements, claiming the levy on sugary drinks will help protect children's health.

The lower band will see brands pay a tax on drinks that they produce or export containing 5g or more of sugar for every 100ml.

A higher band covers drinks containing 8g or more of sugar on every 100ml.

Osborne explained the two-year timeframe would allow companies to "change their product mix". Pure fruit juice and milk-based drinks are excluded from the tax.

Osborne gave no further practical detail, saying only the government would consult the industry on implementation.

News of the incoming sugar tax has already hit share prices and there are arguments both for and against its introduction:

The decision comes after alarming figures from Public Health England claiming the average five-year-old consumes their own body weight in sugar each year. Osborne claimed that within a generation, half of all British boys and around 70% of girls will  be overweight or obese.

The government claims the tax will raise £520m, which it will use to double funding to sport in primary schools and at least a quarter of secondary schools.

Osborne said: "I’m not prepared to look at my time here in this Parliament, doing this job, and say to my children’s generation, 'I’m sorry, we knew there was a problem with sugary drinks, we knew it caused disease, but we ducked the difficult decisions and we did nothing.'"

Promoting low- and no-sugar drinks

Osborne praised Robinsons for reducing sugar across its cordials, and Sainsbury’s, Tesco and the Co-op for committing to reduce sugar across their ranges.

He added that many brands were already retooling their marketing to promote low- and no-sugar alternatives to their sugary drinks.

"They can reduce the sugar content in their products, as many already do, they can promote low-sugar or no-sugar brands, as many already do," he said. "They can take these reasonable steps to help with children's health. Some may pass the price onto consumers, that's their decision, and that would have an impact on consumption too."

The news will come as a blow to brands, some of which have been outspoken critics of the sugar tax.

Paul Polman, CEO of Unilever which owns Lipton Iced Tea, said in January that a levy would be "too simple" a proposal in terms of tackling the issue of child obesity. 

This article originally appears on our sister site Marketing.

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