The Soft Drinks Industry Levy also known as soft drinks sugar tax or sin tax or sugar tax came into force in United Kingdom as part of government’s plan to combat obesity and sugar related disease. With introduction of sugar levy, UK joins few countries, including Mexico, France and Norway that have introduced similar fat taxes.
The Soft Drinks Industry Levy was announced in 2016. It is based on levels of sugar in drinks, with most sugary drinks paying highest tax. Drinks containing 5 grams of sugar per 100ml taxed are taxed at 18 pence per litre, and those with more than 5 grams per 100ml taxed at 24 pence per litre.
The levy will be applied to manufacturers in Britain and whether they pass it on to consumers or not will be up to them. It will be not applicable to fruit juices as they don’t contain added sugar and neither to drinks that have high milk content.
The levy is expected to raise 240 million pounds every year for Treasury. Proceeds from it will be used to directly fund new sports facilities in schools as well as healthy breakfast clubs, ensuring children in UK lead healthier lives.
According to UK government figures, 60% of its population is overweight, with approximately one-in-four people obese. Sugary soft drinks account for around 20% of sugar consumed by children. High sugar consumption has been linked to weight gain, which is risk factor for several obesity related diseases including cancer in adults.
Rather than banning products or forcing companies to act, UK Government through this levy is hoping to nudge manufacturers in healthier direction. One option open to companies is changing recipes to lower added sugar, so that they pay less or no tax.