They’re taxing my minerals now, I hear?
They are. This week a tax on sugar-sweetened drinks comes into force after spending years in the pipeline. While it is Minister for Finance Paschal Donohoe who will get the credit – or the criticism – for introducing the tax, it was first mooted by his predecessor Michael Noonan more than two years ago, but he delayed rolling it out until our cousins across the Irish Sea did likewise.
Why did he have to do that?
There was fear that if the Republic introduced a sugar tax independent of Britain then contraband Coke would start flowing south across the Border.
Why is the tax being introduced?
It is aimed at tacking spiralling rates of obesity, and will see the price of some popular drinks increase by as much as 60 cent for a two-litre bottle. The thinking is that higher prices will lead to lower consumption, and not only will people be incentivised to opt for healthier drinks, but the soft drinks industry will reformulate products to reduce the added sugar content and therefore the tax.
How much is the tax?
It will apply at a rate of 30 cent per litre if drinks have over 8g of sugar per 100ml, while a 20 cent per litre tax will apply if drinks have between 5g and 8g of sugar per 100ml. Drinks with less than 5g of sugar will not be taxed.
What does that mean in cold hard cash terms?
Well, Red Bull and Pepsi have 11g of sugar per 100ml and Coca Cola has 10.6g. All these drinks will be taxed at the highest level. A two-litre bottle of Coke which cost €2.40 last Saturday will cost €3 next Saturday. A 500ml bottle will cost an extra 15 cent, while a 330ml can will cost 10 cent more.
Will it work?
The jury is out. Supporters of the tax say it will make a dramatic difference to our waistlines. Opponents say it will make absolutely no difference, and should be viewed as a regressive tax which will hit the pockets of the poorest most. Whether the addition of a few cent on the price of your can will make you think twice about buying it is debatable, but what is not up for debate is the manner in which the tax has focussed the minds of manufacturers who have been racing to market with reformulated products which will avoid the tax. As many as three-quarters of all soft drinks now sold in the Republic have less than 5g of sugar per 100ml.
What about orange juice?
Fruit juices are to be excluded from the tax. It only applies to “water-based and juice-based drinks which have added sugar content”. Dairy products are also outside the scope of the tax on the grounds that they offer nutritional value.
What about wine and beer? They have sugar in them, right?
They do indeed. And not even the most ardent booze hound could argue that either has any nutritional value. But even so they will not be hit with the tax as it only applies to non-alcoholic drinks.
What’s next?
Health lobbyists and those keen to reverse spiralling obesity levels could now look for a tax on sweet snacks. Last week researchers from the London School of Hygiene & Tropical Medicine, the University of Cambridge and the University of Oxford estimated that adding 10 per cent to the price of chocolate, confectionery, cakes and biscuits could lead to a drop in purchases of around 7 per cent. And given that 20 per cent of the Irish consumers’ Big Shop goes on junk food ,we could do with a little help in that regard.
