Soda tax could threaten Irish economic recovery, industry body warns

By Ben Bouckley

- Last updated on GMT

Related tags Soft drinks Soft drink Nutrition Obesity

Irish government plans to introduce a 'sugar tax' on carbonated drinks could lead to widespread job losses within the Irish food and beverage industry and threaten the nation's economic recovery, Food and Drink Industry Ireland (FDII) has claimed.

Irish health minister James Reilly said that he was considering imposing such a tax on soft drinks to help combat obesity, with officials examining a similar measure introduced in France that targets supposed excess consumption.

But responding to Reilly's statements, with the size of any potential tax as yet undertermined, the FDII said the tax could hamper Ireland's recovery from recession since around 230,000 people are employed within the nation's food and beverage sector.

Paul Kelly, FDII director, said: "The industry has been highlighted by many as a vehicle for Irish economic recovery; any move to impose a discriminatory tax on the sector would potentially stunt this future potential growth and ultimately result in job losses."

Stressing the FDII's concerns at a "discriminatory tax", ​the body said: "The manufacture of food and drink products is Ireland's most important indigenous industry with a turnover approaching €24bn."

And Kelly cited a recent OECD study based on the introduction of a "discriminatory tax"​ on sugar that, he said, showed that such measures generally result in negative impacts upon a country's economy as a whole and led to competitive disadvantage.

Industry has 'taken responsibility'

Kelly said the FDII's members recognised the obesity was a problem, but said firms had "taken responsibility"​ in terms of finding a solution, notably through voluntary industry-wide labelling scheme on Guideline Daily Amounts and product reformulation.

Reacting to the soda tax possibility, a Beverage Council of Ireland spokeswoman told "Not only would a sugar tax be ineffective in reducing obesity, it would also be damaging to the Irish economy. The non-alcoholic beverages industry is worth €1.1 bn a year and pay €200m in VAT."

She added: "Therefore, any move to increase the tax burden on the sector would be most unwelcome and would result in job losses, price rises, loss of competitiveness, increase in imports and a rise in cross border trade."

A spokeswoman for the Union of European Soft Drinks Associations (UESDA) said: "We are concerned that a tax on food and drink is regressive, and that it hits the least well-off members of society the hardest, because clearly they spend a large amount of their income on food and drink."

She added: "We have no evidence ourselves that taxation is going to reduce obesity. If governments really want to make populations healthier, then they need to get involved with education programmes, healthcare systems and social bodies, to teach people how to eat properly and lead active healthy lifestyles.

Discriminatory tax

The spokeswoman also claimed that soft drinks only contributed about 3 per cent to the average European's daily calorie count. "So a woman like me is supposed to have around 2,000 calories. My maths is dreadful but that's only 60-70 calories coming from soft drinks.

"Basically, if we want to tackle obesity, perhpas we should look at where the other 97 per cent of calories come from? It's not just from one product.

Also, the World Health Organisation and European Commission all agree that obesity rates are multi-factorial, also relate to exercise levels and sedentary jobs, etc."

'Health taxes' also risked discriminating against specific food groups, the spokeswoman warned. "Clearly all foods are equal, calories are equal. There are no good foods and bad foods, only good diets and bad diets, I think any nutritionist would tell you that."

Nonetheless, she added that UESDA understood that, since taxes had reached areas such as waste, capital gains and carbon emissions, governments clearly needed to address budget deficits.

And asked whether she believed politicians sometimes singled out producers for unfair criticism, she added: "Industry bashing is in vogue, but the soft drinks industry has well over 1,000 production plants in Europe, and is a big employer and is big contributor of taxes anyway, because it makes profits like industry is supposed to."

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