Responding to today’s call by leading medical bodies for a 20p per -litre levy on soft drinks to be included in this year’s Budget, Paul Dobson, Professor of Business Strategy and Public Policy at the University of East Anglia, commented: “Proponents say that such a levy would raise over £1bn in duty, based on the assumption that consumption will remain at 5,727 million litres of sugary soft drinks a year.
“International evidence suggests that such a tax would skew sales away from the targeted products, but not necessarily towards healthier ones like diet drinks or water. A major beneficiary could be beer or other alcoholic drinks.”
Prof Dobson, who has conducted extensive research on food and drink pricing, added: “This tax could hit consumers hard, since not only would sugary soft drink prices rise with such a tax but also the prices of potential substitute products would likely rise, under the umbrella of the tax-induced price rises. The result will be inflationary and hurt consumers at a time when they can ill-afford to face even higher prices.”
As seen by Denmark’s now abandoned ‘fat tax’, the duty raised from such a tax would likely be significantly below that claimed.
“The government should consider the costs and benefits of such a tax before making a hasty decision, while also considering the merits of other measures, like the decision by New York City to limit the sizes of sugary drinks sold at eateries,” said Prof Dobson.
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