Irish Beverage Council calls for soft drinks tax deferral amid risk of border smuggling

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07 Sep 2017 --- The Irish Beverage Council, the lobby group representing the soft drink sector, has called for a deferral of the proposed sugar-sweetened drink tax claiming it could lead to increased border smuggling and will drive consumers to buy cheaper goods in Northern Ireland.

The Council submission highlights that the combination of cross border shopping, uncertain all-island trade post-Brexit and the increasing cost of the weekly shop through new consumer taxes, all threaten to facilitate what is describes as a “perfect storm”. 

Irish Beverage Council Director Colm Jordan believes the proposals to introduce a levy on sugar-sweetened beverages will not be financially sound.

“With the euro in our pockets now buying more against the Sterling, Irish shoppers are increasingly heading North. The Minister for Finance must defer his plan for higher taxes on our weekly shop,” he says.

“We are forecasting that 11 percent of sugar-sweetened drink sales will be lost to cross-border shopping and the unofficial gray market. That amounts to a €30m (US$36 million) loss to our economy in a full operating year of the sugar tax. This must be seen in context; the soft drink tax will only raise €40m (US$47.8 million).”

“In the past 34 months the Department of Finance has changed how much they predict the tax will raise on five separate occasions. The prediction fell 53 percent between April and July alone. This shows there is uncertainty about how the tax will work.”

A proposed tax on sugar-sweetened drinks is due to come into force next April as Ireland joins a growing list of countries around the world introducing legislation as a way of curbing rising obesity levels, particularly in children. 

The Irish Government is expected to outline plans next month in the October budget. 

“Given the fully integrated nature of the supply and production systems for soft drinks across our island, Brexit poses a significant challenge to any sugar-sweetened drink tax design,” adds Jordan.

“The loss to the Exchequer and the uncertainty as to how the tax will work, along with the fallout from Brexit, makes it impossible to design a workable, fair or equitable sugar-sweetened drink tax. It’s a perfect storm, the only logical step is to defer the proposed tax.”

“We accept the Government's sincerity in addressing the complex societal issue of obesity and we are fully committed to playing our part.”

He adds how soft drinks companies have been reducing sugar content for 30 years and how ten billion calories have been removed from the Irish diet each year between 2005 and 2012 through voluntary sugar reduction. 

“We will go further and continue this investment in innovation, reducing sugar content while increasing our no sugar and low sugar offerings,” Jordan adds. 

“While childhood obesity rates continue to increase, daily consumption of sugar-sweetened soft drinks amongst 11, 13 and 15 year-olds fell by 70 percent between 2002 and 2014 according to the World Health Organisation. With less sugar in soft drinks and fewer children drinking sugar-sweetened drinks daily, the singling out of sugar-sweetened drinks is totally unjustified. This must be acknowledged with a deferral.” 

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