The Irish Beverage Council (IBC) has warned that the introduction of a 10 cent sugar tax on a can of soft drink would result in a loss to the Exchequer of $38.8 million in revenue a year.
IBC has produced "Sugar Tax: all cost, no benefit" in advance of October's Budget. It said: "The suggested 'sugar tax' is cumbersome, it will be difficult to implement and have significant unintended consequences which will be costly to consumers, soft drink companies, and the economy, while threatening the most indigenous industry in the State."
The Programme for a Partnership Government, concluded earlier this year between the minority Fine Gael administration and the opposition parties, included a proposal for a new tax on sugar-sweetened drinks (SSDs). The Department of Health has since recommended that the SSD tax apply to water-based and juice-based drinks that have an added sugar content of five grams per 100ml and above.
According to 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 a sugar tax is singularly ineffective."
Ireland currently imposes a 23 percent value-added tax (VAT) on soft drinks, including sugar-sweetened drinks. IBC argued that consumers are prepared to cross borders to purchase soft drinks where a price differential exists, and pointed out that Denmark "abandoned a tax on sugar-sweetened drinks after only 15 months because it was losing EUR38.9m in VAT due to consumers travelling to Germany or Sweden to purchase products."
IBC estimated that a rise in the number of consumers travelling to Northern Ireland to purchase soft drinks would result in the annual loss of EUR35m in VAT that would otherwise have been payable on those sales in the Republic.
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