UK sugar tax: Government encourages further reformulation as draft legislation published

The new documents confirm the levy on importers and producers of beverages with added sugar will have two thresholds: at 5g sugar per 100ml and 8g sugar per 100ml. It also reiterates the levy will take effect from April 2018, giving companies time to reformulate products.

The soft drinks industry levy was announced in March as part of Budget 2016, and a consultation was run from August to October.

The draft primary legislation has now been published, and a further eight week technical consultation on the legislation will close on January 30, 2017.

The final levy details will be published in Budget 2017.

“The industry has shown reformulation is possible without turning off consumers, and significant industry players have acted to accelerate this process since the levy was announced in March 2016, but others need to be more ambitious and move faster,” says the government. “There is still time for others to act over the next 18 months.”

Reformulation push

The sugar tax – which applies only to non-alcoholic beverages – is described as a ‘central pillar’ in the government’s childhood obesity plan.

Jane Ellison MP, financial secretary to the treasury, says that big players in the industry have already proved that change is possible.

For example, Tesco has reduced the sugar content in its own brand soft drinks; Lucozade Ribena Suntory has pledged to cut the sugar content of its portfolio by 50%, and AG Barr has launched sugar-free Irn-Bru Xtra.

“The levy has been designed to drive reformulation in the soft drinks market, and over the past few months we have seen the effects that government action is having,” said Ellison.

“Several major companies in the UK soft drinks market have recently strengthened their commitment to reformulate before implementation, and therefore some of these will not pay the levy on any of their drinks by the time the tax goes live in April 2018. This shows that change is possible.

“We recognize the work of market-leading companies, and acknowledge the investment costs associated with reformulation work. Individual companies’ commitments to recipe changes, portion re-sizing and marketing lower sugar brands in the run-up to April 2018 will all be rewarded through the levy design.”

In the consultation on the sugar tax, responses were received from health and medical groups (26%), manufacturers (25%), individuals (18%), trade associations (13%), government departments and local authorities (11%) and retailers (7%).

“Over half of all respondents were in favor of the levy, with many wishing to extend the scope of the levy to other products,” says the report on the consultation.  

“In particular 95% of medical and health bodies who responded to the consultation were supportive of the proposals, and 73% of retailers. A majority of manufacturers and associated trade bodies were opposed to the levy (78%).”

Opinions on sugar taxes

The British Soft Drinks Association points to research from Oxford Economics that suggests that a soft drinks tax will lead to more than 4,000 job losses and a decline of £132m ($168m) in the UK economy.

It also points to the industry’s own targets to reduce sugar in soft drinks.

“There is no evidence worldwide that taxes of this sort reduce obesity and it is ironic that soft drinks are being singled out for tax when we’ve led the way in reducing sugar intake, down over 17% since 2012,” said Gavin Partington, director general, BSDA.

“We’re also the only category to have set a 20% calorie reduction target for 2020.”

But the British Medical Association (BMA) wants to ensure that rates are set at a high enough level to ensure it is effective as possible.

“While sugary drinks are very high in calories, they are of limited nutritional value,” said Dr Paul Darragh, BMA board of science’s deputy chair.

“As the largest source of sugar for children, doctors are increasingly concerned about how they contribute towards conditions like diabetes, which can have a devastating impact on individuals and place a huge financial burden on an already overstretched NHS.

“We believe the government’s drive to introduce the levy is a positive first step to encourage healthier diets, and urge the Treasury to set the rates at a high enough level to ensure it is as effective as possible in reducing the growing levels of obesity in the UK.”

The government documents can be found here.