Crunch time: Ireland’s sugar tax begins but will higher prices lead to lower consumption?

01 May 2018 --- After years of debate, Ireland’s sugar-sweetened tax on soft drinks comes into effect today (May 1) pushing up the price of sugar-laden beverages in a bid to cut spiraling obesity rates in the country. Soft drinks companies were early movers in sugar reduction and reformulation has been going on for many years. However, Ireland’s tax will push up the price of popular sodas, adding 30 cents per liter to the cost of soft drinks containing more than 8g of sugar per 100ml.

There are two rates of tax; 20 percent liter on drinks with 5g of sugar or more but less than 8g/100ml and the 30 percent per liter applies to beverages containing 8g or more of added sugar per 100ml.

The tax only applies to water-based drinks and juice-based drinks which have had added sugar content so pure fruit juices are excluded from the levy and dairy products also fall outside the scope.

Today’s tax introduction follows the European Commission clearing the way for the sugar levy last week when the EC concluded that Ireland's sugar tax does not involve State aid

In its assessment, the Commission found that soft drinks can be treated differently to other sugary products given health objectives. For example, the Commission took into account the fact that soft drinks are the primary source of calories devoid of any nutritional value and thereby raise particular health issues.

Industry reducing sugar in drinks
The Irish Beverage Council, the Ibec group that represents soft drinks companies, says that three-quarters of soft drinks sold in Ireland are sugar tax-free. This is due to industry’s 35-year journey to reduce sugar content in drinks, according to the group.

“Soft drinks companies were early movers in sugar reduction, beginning in 1983 when the first sugar-free carbonated drinks were introduced. Since the 1990s, the number of no-sugar drinks has increased substantially,” said Irish Beverage Council Director, Colm Jordan.

“Consumers want to manage their sugar intake and that is why the industry is investing in innovative new products to match evolving tastes.”

“We accept the Government's sincerity in addressing the complex issue of obesity and are committed to working on shared solutions that deliver real public health benefits. Seventy-six percent of soft drinks are now sugar tax-free.”

Jordan says that in Ireland, 10 billion calories have been removed annually between 2005 and 2012 through voluntary sugar reduction in soft drinks, representing a 10 percent reduction in seven years.

“Today, soft drinks represent less than 3 percent of Ireland’s calorific intake,” he adds.

“The Government’s Health Impact Assessment found no conclusive evidence a tax on sugar-sweetened drinks will impact population weight. Wherever a tax has been introduced, it has failed to tackle obesity. Notwithstanding this, we have cooperated fully with the design and implementation of the tax.”

Ireland’s sugar tax also closely follows the UK sugar tax which started on April 6.

Prime Minister Theresa May introduced the levy as part of the Childhood Obesity Strategy in a bid to change the consumption habits of children across the country as the latest statistics reveal Britain has a big problem with overweight and obese kids. Excessive sugar consumption, much of which comes from soft drinks, is being blamed for the crisis.

Britain’s sugar tax has two tiers; a lower rate of 18 pence per liter for beverages with a total sugar content between 5-8g per 100ml and a higher price of 24 pence per liter for drinks with total sugar more than 8g per 100ml.

As ever with sugar levies, supporters believe that pushing up the price will make a difference to the numbers of people opting for sugary drinks and encourage them to choose healthier alternatives, while opponents think sugar taxes do not make a difference to obesity numbers in the long term.

By Gaynor Selby