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Irish Beverage Council Slams Sugary Drinks Tax

by Jason Gorringe, Tax-news.com, London

20 April 2017

The Irish Beverage Council (IBC) has said that the proposed tax on sugar sweetened drinks will fail to adequately tackle obesity.

IBC Director Colm Jordan said: "The over simplistic idea that taxing soft drinks impacts consumption ignores the hard evidence. If demand was based on price, 'own brand' soft drinks would be market leaders – they are not. Taste is a more significant factor in consumer choice than price. Reformulation, rather than price hikes, will have a greater impact on consumer behavior and calorie intake with no increase in the cost to our weekly shop."

The Irish Government recently consulted on plans to introduce a tax on sugar-sweetened drinks from April 2018. The Department of Health has proposed that the tax should apply to water-based and juice-based drinks that have an added sugar content of five grams per 100ml and above. The Government intends for liability to pay the tax to fall at the earliest possible point in the distribution chain.

Jordan said that IBC members "removed 10 billion calories from the national diet from 2005 to 2012 by reformulating to reduce sugar content." He added that there has been a surge in the number of "no sugar" products entering the market, and that just three percent of Ireland's calorific intake comes from sugar-sweetened drinks.

Jordan pointed to a recent University of Oxford report which he said showed that a tax would reduce obesity in Ireland by only 0.3 percent, and to McKinsey Global Institute analysis which found that product size and reformulation were the two most effective interventions against obesity. He argued that the reports illustrate that "increasing the cost of beverages for the consumer does not work," and that obesity had increased in the four countries where similar taxes were introduced.

Last month, Finance Minister Michael Noonan said that the policy is "having a positive impact prior to its introduction," with manufacturers already reducing the sugar content of their drinks.

Noonan told Parliament that the initial estimate had been that the tax would apply to 60 percent of sales. However, he said his Department "has been informed by the soft drinks industry that due to the continual reformulation of products … the total taxable soft drinks products is now closer to 50 percent."

Noonan added that "the resulting yield will likely be less than estimated."

TAGS: tax | Ireland | public health | Health tax | food | tax rates | tax reform | trade association | trade

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