Sugary drinks tax will raise less than hoped (UK)

A new tax on sweet drinks is likely to raise less revenue than originally estimated as manufacturers have already started to lower the sugar content in their products. The new measure is due to come into force in the Republic in April next year. Potential yields were calculated on the levy applying to 60 per cent of all soft drinks sold, but Michael Noonan said the estimate has been reduced to about 50 per cent as it is now believed that half of all fizzy drinks will escape the tax. He added, however, that health benefits were already being realised. “The soft drinks industry continue to reformulate their products, including sugar content, in order to limit their exposure to the tax,” the finance minister said in reply to a parliamentary question from Joan Burton, the Labour TD. “This indicates that the policy is already having a positive impact prior to its introduction. However, this means that the resulting tax yield will likely be less than estimated.” The introduction of the measure is being timed to coincide with a similar tax in the UK, where the government has already reduced its projected yield by 27 per cent in response to reformulation by manufacturers. It now believes the charge will raise £380 million (€443.7 million) annually instead of the original estimate of £520 million (€607.2 million).

Source: www.thetimes.co.uk