Budget 2016: The Sugar Tax

The sugar tax was the shock announcement in today’s budget. Floated for years by politicians and commentators of every colour, it’s a mixed bag. On the one hand, it could have a severely positive effect on public health while ensuring those whose choices put them at greater risk of illness have a lesser impact on the wider tax burden ensured to fund treatment. On the other hand, it’s another example of the nanny state interfering with personal responsibility and it’s deeply regressive, hitting the poorest significantly harder.

 

Surprisingly, Nigel Farage immediately went for the ridiculous, claiming a small tax on sugar would immediately lead to a black market and bootlegging. A black market is highly unlikely, and- with the complexity of most modern soft drinks manufacturing- bootlegging because of a few pennies worth of tax seems a bit extreme.

 

Regardless, the move looks like a U turn. Only last year, a government spokesperson said that a sugar tax was off the table as ‘The Prime Minister thinks there are more effective ways of tackling this issue than putting a tax on sugar’. Traditionally, the Tories don’t like it when the nanny state rams its grubby hands into people’s lives.

 

Labour’s soft left are also unsure how to react. The sugar tax will be regressive, there’s not really much argument about that. It also won’t hit the big soft drinks manufacturers too hard: Coke and Pepsi will be able to soak up the difference far more easily than the manufacturers selling lemonade or own brand cola for 11p a litre. At the same time, the effect on public health could be huge, and people like Andy Burnham have advocated exactly the same policy in the near past.

 

Osborne has said he expects the tax to raise £20 million in the first year. In the context of government spending, that’s lunch money. Clearly this tax isn’t going to clog up Osborne’s black hole. But it’s been very successful if its purpose was to distract us from that black hole; no one seems to now be talking about poor tax receipts, poor wage growth and high public spending. 

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