Irish Beverage Council Highlights Costs of Proposed Sugar Tax
The Irish Beverage Council (IBC), the Ibec group that represents companies that produce, distribute and market soft drinks, juices, bottled waters and sports and energy drinks in Ireland, has published a new analysis of the impact of a possible sugar tax, which sets out the economic damage to consumers, business and the Irish economy that would result. It also examines the international evidence, which points to no resulting health benefits.
In ‘Sugar Tax: all cost, no benefit’, a detailed report for the Finance Minister in advance of Budget 2017, IBC points out that despite being introduced in a number of countries, sugar taxes have never achieved public health objectives of reducing the consumption of sugar or decreasing levels of obesity, overweight and related diseases.
However, the consequences of such additional discriminatory charges have instead increased grocery bills for families, spurred cross-border trade and smuggling, increased costs on businesses and threatened jobs.
IBC Director, Kevin McPartlan says: “Industry has a crucial role to play in tackling the serious obesity problem in Ireland. However, it is vital that the focus is on interventions that make a genuine and sustained positive impact. A sugar tax may be populist, but it is simply not supported by evidence. International experience proves beyond any doubt that sugar tax is singularly ineffective.
The report finds that a 10c sugar tax on a can of soft drink would result in:
* The average Irish household’s annual grocery bill will increase by €60
* Irish soft drinks companies will lose sales worth approximately €60 million per year
* The Irish exchequer will lose revenue of €35 million per year.
According to the report, if a soft drinks tax is introduced in the Republic then manufacturers, importers and distributors of soft drinks will not be alone in losing significant income due to cross border trade. The VAT which would otherwise be payable on those sales will be lost to the Irish Exchequer. This would have the effect of replacing a stable form of tax income with an extremely unstable one.
Based on the same industry modelling which revealed the level of loss to industry, it has been calculated that tax returns are likely to be reduced by €35 million. IBC urges the Minister for Finance to protect the level of VAT raised in Ireland by discouraging illicit cross border trade in soft drinks.
Kevin McPartlan continues: “Some say a sugar tax should be introduced even if it does nothing to reduce levels of obesity as it would create revenue to fund public health initiatives. Even if we ignore the fact that Department of Finance officials have ruled out such an approach, the revenue lost to cross border trade and the potential cost of lost jobs in the Irish soft drinks sector would greatly reduce and possibly even eliminate the net gain to the exchequer.”
A comprehensive recent report conducted by Food Drink Industry Ireland found that through reformulating existing drinks and introducing new products, IBC members removed over 2500 tonnes of sugar and 10 billion calories from the Irish diet in the seven years to 2012. This was at no cost to consumers. Imposition of a sugar tax would threaten soft drinks companies’ capacity to continue investment in such initiatives.
As Budget 2017 approaches, IBC urges the Minister for Finance not to introduce an additional charge on soft drinks that would achieve no public health benefit but will cost consumers, business and the Irish economy.
