The Soft Drinks Industry Levy is a key part of the government’s childhood obesity strategy, and was first announced at Budget 2016. Here's how it works.
1. Is this the same as the “sugar tax”?
The Soft Drinks Industry Levy (SDIL) was nicknamed the “sugar tax” by the media and online when it was announced at the 2016 Budget. But this isn’t a tax on all sugar; the levy directly targets the producers and importers of sugary soft drinks to encourage them to remove added sugar, promote diet drinks, and reduce portion sizes for high sugar drinks.
Respond to the consultation on the Soft Drinks Industry Levy
2. Will the Levy increase how much a soft drink costs me?
This is not a tax on consumers. The government is not increasing the price of products; companies don’t have to pass the charge on to their customers. If companies take the right steps to make their drinks healthier they will pay less tax, or even nothing at all.
3. What exactly will be taxed?
The levy will make soft drinks companies pay a charge for drinks with added sugar, and total sugar content of five grams or more per 100 millilitres. That is about 5% sugar content. There is a higher charge for the drinks that contain eight grams or more per 100 millilitres, or about 8% sugar content. This means that pure fruit juices won’t be taxed, because they don’t contain added sugar. Neither will drinks that have a high milk content, because they contain calcium and other nutrients that are vital for a healthy diet.
4. What will the money raised be spent on?
In England, the new levy revenue will be invested in giving school-aged children a brighter and healthier future, including programmes to encourage physical activity and balanced diets. For Scotland, Wales and Northern Ireland, the Barnett formula will be applied to spending on these new initiatives in the normal way.
5. Why soft drinks in particular?
There are nine teaspoons of sugar in a 330ml can of cola, instantly taking children above their recommended maximum for the day. A five year old should have no more than 19g of sugar in a day, but a typical can of cola can have 35g. Public health experts from the Chief Medical Officer to the British Heart Foundation agree that sugar-sweetened soft drinks are a major source of sugar for children and teenagers, and that sugar intake drives obesity.
Many soft drinks contain no intrinsic nutritional value, and could be easily reformulated to contain less sugar. Some companies have already done this.
6. Is obesity really a major problem?
Unfortunately, yes. The UK has one of the highest obesity rates among developed countries, and it’s getting worse. By 2050, over 35% of boys and 20% of girls aged 6-10 are expected to be obese. The estimated obesity-related costs to the NHS is over £6 billion.
7. Can soft drinks producers really reformulate their products?
Yes. Reformulation is definitely possible and some players in the soft drinks industry are already moving in the right direction. Companies like Tesco, Robinsons and The Co-Operative have already taken steps to reformulate.
And this isn’t the first time the food and drinks industry has put the public’s health first. The evidence from salt reformulation shows that industry behaviour can reduce unhealthy consumption – salt intake has been reduced by 15% over the last 10 years by industry taking action. But with a looming obesity crises government believes a strong lever is needed to incentivise industry to move faster and act now.
8. How does this compare to what other countries have done?
Many countries – including France, Finland, Hungary and Mexico – have introduced taxes on soft drinks in various forms. The World Health Organisation has said that taxes are needed to help halt obesity rises across the globe.
The levy that the UK government has unveiled is aimed directly at producers and importers, not consumers, because the government believes that producers need to act, rather than just passing higher prices onto consumers. This kind of approach has been tried in Hungary, and researchers there found that companies did act to remove unhealthy ingredients.
9. Who supports the levy?
Chef Jamie Oliver and other expert health campaigners have highlighted the problem of childhood obesity in the UK.
In fact, over 60 public health organisations have called for a tax on sugary drinks. This includes Public Health England, The British Medical Association and the Royal Society for Public Health. Dame Sally Davies, Chief Medical Officer for England, has said that reformulation and resizing are the key wins for tackling obesity.
10. When will this come into force?
Not for another two years. The government is giving producers time to take action before the tax begins, and consulting on some of the detail of the levy. The government will set out detailed legislation in the Finance Bill 2017, with implementation expected from April 2018 onwards. This gives producers time to reformulate their products, so they won’t have to pay the levy.
11. What’s next – will you start taxing confectionery or other sugary snacks?
No. There are no current plans to introduce similar levies or expand this one to confectionery.
However, the government hopes this levy will encourage the entire food and drinks industry to play their part in developing products with lower sugar content.
12. Will the public and experts have a say about the levy?
A public consultation is being run over the summer on the detail of the levy. This will include working with industry and health experts and consulting on a wide range of technical details such as how best to exclude certain drinks, and how to protect the smallest producers.