Osborne said that the tax will be introduced in September 2017, to allow companies time to adjust, amongst other things, the recipes for their drinks.
He added that the tax will be “assessed on the volume of sugar sweetened drinks they produce or import.”
Sugar will be taxed in two different bands, Osborne said. The first will be all drinks with more than five grams of sugar per 100ml, and the second, which will be higher, for drinks with more than eight grams per 100ml. Fruit juices and milk-based drinks will be exempt.
The tax is expected to raise around £520 million in the first year, which Osborne said will be used to help fund sport in schools. The chancellor pointed to the fact that many soft drinks contain as much as nine teaspoons of sugar in them, and that can be spectacularly damaging to the health of kids, and is a key contributor to childhood obesity in the UK.
Here’s exactly what Osborne had to say about the tax, during his speech (emphasis ours):
You can not have along term plan for the country, if you do not have a long term plan for out children’s healthcare – and here are the fact that we know. 5-year old children are consuming their bodyweight in sugar every year. Experts predict that within a generation, over half of all boys and 70% of girls could be overweight or obese. Here’s another fact that we all know, obesity drives disease, it increases the risk of cancer, diabetes and heart disease and it costs our economy £26 billion a year.
Osborne went on to say:
I’m not prepared to look back at my time, here in this parliament, doing this job, and say to my children’s generation, I’m sorry, we knew there was a problem with sugary drinks, we knew it caused disease, but we ducked the difficult decisions and we did nothing.
As soon as Osborne announced the new sugar levy, shares in British sugar company Tate and Lyle had a heart attack, and dropped to a 4% loss. Here’s how that looked:
Shares in A.G. Barr, the Scottish company which makes Irn Bru, and Britvic, which makes Robinsons squash, also dropped at the announcement.
Predictably, soft drink manufacturers aren’t happy with the sugar levy, and the official trade body of the UK soft drinks industry called the tax “simply absurd.”
Gavin Partington, Director General of British Soft Drinks Association, said: “We are the only category in the food and drink sector which has consistently reduced sugar intake in recent years – down 13.6% since 2012.
“By contrast sugar and calorie intake from all other major take home food categories is increasing — which makes the targeting of soft drinks simply absurd.”