A group representing the Irish soft drinks sector has called on the country’s government to delay the introduction of a proposed sugary drinks tax.
The Irish Beverage Council (Ibec) believes that if the tax comes into effect next year, the Irish exchequer will lose tens of millions of euros as a result of drinks smuggling across the border from Northern Ireland.
A tax on sugary drinks is due to be introduced in April 2018 as the government aims to reduce obesity. Details are likely to be revealed in the October budget.
However, Ibec has this week published its pre-budget statement called ‘All cost – no benefit’, which warns the government that a combination of cross-border shopping, uncertain trade post-Brexit and the increasing cost of the weekly shop through new taxes threaten to facilitate a ‘perfect storm’.
Ibec’s director Colm Jordan said: “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.
“We are forecasting that 11% of sugar-sweetened drink sales will be lost to cross-border shopping and the unofficial grey market. That amounts to a €30 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 €40 million.”
He added that Ibec accepts the government’s plan to address obesity in Ireland, but highlighted that soft drinks companies have been reducing sugar content and introducing sugar-free variants in recent years.
“With less sugar in soft drinks and fewer children drinking sugar-sweetened drinks daily, the singling out of sugar-sweetened drinks is totally unjustified,” he said. “This must be acknowledged with a deferral.”
In the UK, the government is also set to introduce a sugar tax next year in attempts to incentivise companies to reduce sugar in their drinks.
Chancellor Phillip Hammond said in his March budget statement that the measure would bring in only £380 million for the treasury – less than the £520 million originally calculated – because ‘producers are already reformulating sugar out of their drinks’.
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