The tax will come into effect in April next year, at the same time as a similar levy in the UK.
The government says the levy is ‘one of a suite of measures’ to tackle obesity, with the aim of reducing sugar drink consumption and encouraging the industry to reformulate products. The two-tier levy will apply to non-alcoholic drinks with more than 5g sugar per 100ml.
It estimates it will yield in the region of €30m ($35m) in 2018 and €40m ($47m) in a full year.
Motivation for reformulation
In last year’s Budget the Irish government announced its intention to introduce a sugar tax, but with implementation set for 2018 to align it with the UK levy.
This was followed by a public consultation process and discussions with relevant UK bodies.
“It is hoped that the introduction of a financial barrier on sugar sweetened drinks will result in reduced consumption by incentivising individuals to opt for healthier drinks, in tandem with providing motivation for the soft drinks industry to reformulate by reducing added sugar content and delivering healthier products,” explains the Department of Finance in the Budget 2018 documents.
Irish Heart has welcomed the levy, calling it ‘probably the single most important action Government can take to tackle Ireland’s obesity crisis’.
“The Minister’s announcement demonstrates a significant commitment on the part of Government to meet its duty of care to protect the health of children in particular,” said Chris Macey, Irish Heart head of advocacy.
“We are also encouraged by indications that the measure is already proving effective by prompting beverage companies to reduce sugar content to ensure products fall below the threshold for the tax.”
14% of the Irish population consume sugar sweetened drinks daily; in the 15-24 year old age group this figure is 22% (Healthy Ireland 2016 survey)
37% of Irish women and 38% of Irish men will be obese by 2025, according to a recent study from Imperial College London.
Ireland’s Obesity Policy and Action Plan 2016-2025 recommends the introduction of a sugar levy.
But the Irish Beverage Council says a sugar tax will not tackle obesity.
Irish Beverage Council Director, Colm Jordan, said: “We’ve been offering low-sugar drinks for 30 years. We will continue to reduce sugar content and increase our no-sugar/low-sugar offering to reflect consumer taste and choice.
“Obesity is a complex societal issue. Where similar taxes were introduced, obesity rates increased. The Department of Health’s own assessment found no conclusive evidence a tax will impact population weight. We are committed to working with Government on solutions that deliver real public health benefits.
“Taxing one ingredient in some sugary drinks, but not all sugary drinks, will not combat the complex challenge of obesity.”
In its pre-budget submission the Irish Beverage Council warned that Irish businesses and consumers were facing a ‘perfect storm’ of new consumer taxes and uncertain trade conditions due to the Brexit process.
What drinks will be subject to the levy?
The two-tier levy will apply to non-alcoholic, water-based and juice-based drinks with an added sugar content of 5g per 100ml or more. Pure fruit juices will be exempt, as will dairy products, on the grounds of their nutritional value.
Small producers, who are exempt from particular EU food labelling obligations, will also be exempt from the tax.
For sugar-sweetened drinks with a content of 5 grams sugar or more per 100ml, a tax of 20c per litre will apply; and for drinks with 8 grams sugar or more the rate will be 30c per litre. The tax uses the same two-tier divisions as the UK levy.