New Analysis of Irish Sugar Tax Suggests Economic Damage

09 Aug 2016 --- Introducing a sugar tax in Ireland would do very little to tackle the country’s obesity issues and instead increase consumers’ annual shopping bill, says the Irish Beverage Council.

In advance of Ireland’s Budget 2017, The Irish Beverage Council (IBC) has published new analysis of the possible impact that a sugar tax could have on the country’s economics and the purse strings of shoppers. It urges the Finance Minister not to introduce an additional charge on soft drinks. 

The report, Sugar Tax: all cost, no benefit, sets out the economic damage to consumers and businesses, whilst examining the international evidence of other countries which have introduced a sugar tax. It says there has been little proof to resulting health benefits. 

According to IBC, instead the consequences of “additional discriminatory charges” have led to increased grocery bills for families, spurred cross-border trade and smuggling, increased costs on businesses and threatened jobs. 

It says sugar taxes have never achieved public health objectives of reducing the consumption of sugar or lowering levels of obesity, overweight and related diseases. 

However Safefood, a body that promotes awareness of food safety and nutrition issues, is supportive of a sugar sweetened beverages tax being imposed in Ireland in this year’s budget. This is in line with the policy of all major political parties, the public and the medical and health professional bodies.

Dr Cliodhna Foley-Nolan, Director, Human Health & Nutrition, Safefood commented ”It has conclusively been proven that sugar sweetened beverages intake, particularly in children, leads to weight gain and indeed tooth decay. There is no nutritional value in these products. We are in the throes of a childhood obesity epidemic. This is one of a range of measures that is highly likely to influence parents and children’s behaviour," tells FoodIngredientsFirst. 

IBC represents companies that produce, distribute and market soft drinks, juices, bottled waters and sports energy drinks in Ireland. 

“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,” says IBC director, Kevin McPartlan. “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 predicts a 10c sugar tax on a can of soft drink would add €60 to the average annual grocery bill, Irish soft drinks companies would lose sales worth an estimated €60 million per year, and the Irish exchequer would lose revenue of €35 million annually. 

According to the report, introducing a soft drinks tax in the Republic would damage manufacturers, importers and distributors, but they wouldn’t 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 replace a stable form of tax, with an unstable one. 

IBC also urges the Minister for Finance to protect the level of VAT raised in Ireland by discouraging illicit cross border trade in soft drinks. 

“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 ignored 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.” 

The IBC also says a recent report by the Food Drink Industry Ireland found that through reformulating existing drinks and introducing new products, IBC member removed more than 2,500 tons of sugar and ten billion calories from the Irish diet in the seven years up to 2012. This was at no cost to the consumer. 

by Gaynor Selby