A tax on sugar-sweetened drinks will be introduced next April as the Minister for Finance followed through on widely flagged plans to impose such a levy on drinks the Government believe offer little or no nutritional value.
The move is aimed at tacking spiralling rates of obesity and will see the price of some popular drinks increase by as much as 60 cent for a two-litre bottle.
Is this a surprise?
Not remotely. It was announced in last year's budget by Michael Noonan although he said then it would have to be delayed to make sure its introduction coincided with a similar tax being rolled out in the UK and Northern Ireland.
Why did that matter?
There were fears that if the State introduced a sugar tax of soft drinks in isolation it would effectively create a sugar smuggler’s charter.
When is it being introduced and how much will it cost?
Next April and the tax will apply at a rate of 30 cent per litre if drinks have over 8g of sugar per 100ml while a 20 cent per litre tax will apply if drinks have between 5g and 8g of sugar per 100ml. Drinks with less than 5g of sugar will not be taxed.
What does that mean in cold hard cash terms?
Well, Red Bull and Pepsi have 11g of sugar per 100ml and Coca Cola has 10.6g. All these drinks will be taxed at the highest level. A two-litre bottle of Pepsi costing €2.40 today would cost €3 in April once the tax is applied. A 500ml bottle will cost an extra 15 cent while a 330ml can will cost 10 cent more.
What about orange juice?
It depends on the brand but it doesn’t matter as fruit juices are to be excluded from the tax. It only applies to “water-based and juice-based drinks which have added sugar content”. Dairy products are also outside the scope of the tax on the grounds that they offers nutritional value.
What about wine and beer?
They may have little nutritional value but the tax only applies to non-alcoholic drinks.
What is the point of it?
It is hoped it will result in reduced consumption by incentivising people to opt for healthier drinks while also providing motivation for the soft drinks industry to reformulate their products to reduce the added sugar content.
How much will it raise?
The Department of Finance says the tax will yield in the region of €30 million next year and €40 million in a full year
Has it been welcomed?
Well that depends. The Irish Heart Foundation said its introduction was "a landmark day in the fight against obesity" while the Irish Beverage Council, the Ibec group that represents soft drinks companies, condemned the move, saying "taxing one ingredient in some sugary drinks, but not all sugary drinks, will not combat the complex challenge of obesity."
Will it reduce obesity levels?
The industry says no but Prof Donal O’ Shea, Ireland’s leading obesity expert, said it was “a hugely important step towards reducing obesity”. He said estimates are “that this measure could reduce obesity rates within five years by thousands of cases per year.”
