Sugar tax is destined to fail, claims legal expert

By Noli Dinkovski

- Last updated on GMT

The sugar tax poses more questions than answers said Dominic Watkins
The sugar tax poses more questions than answers said Dominic Watkins

Related tags: Soft drinks, Sucrose

The proposed sugar tax on soft drinks is likely to fail in its intended aim of reducing calorie intake as consumers will simply trade down to cheaper, own-label variants, a leading legal food specialist has claimed.

Taxation, even if workable, also doesn’t address the “fundamental challenges​” posed by more sedentary lifestyles, according to Dominic Watkins, partner and head of food at DWF.

Watkins suggested there were a considerable number of practicalities to overcome before the tax, announced in Chancellor George Osborne’s Spring Budget, became a reality.

“There are a series of issues to address, concerning how the tax is collected, who collects it, and how records are maintained,”​ he said. “And once you get past that, the potential definitions behind which products would qualify for taxation, and which wouldn’t, presents a legal minefield.

‘Up in the air’

“Will drinks with fructose or honey count? There’s also a suggestion that dairy-based drinks may be excluded, but will that apply to all drinks containing dairy? Will frozen drinks apply as well? So much of it is up in the air at the moment.”

An interpretation of the tax proposals from the Office for Budget Responsibility has found that it is likely to consist of a ‘main rate’ charge of 18p per litre (ppl) for drinks with 5–8g of sugar per 100ml, and a higher rate charge of 24ppl for drinks with more than 8g per 100ml.

However, Watkins said that in other countries where similar taxation measures had been applied, evidence suggested that consumers simply switched to cheaper products.

‘Forced to charge a premium’

“If the leading brands are forced to charge a premium on soft drinks, consumers will trade down to own-label variants and effectively stay at the same price point.

“That’s what the evidence suggests happened in France, and that’s one of the interpretations of what happened in Mexico.

“History tells that gradual reformulation of products is a much better approach than trying to reduce calories in one jump. It’s got to be a sequential reduction, otherwise consumer pallets won’t react kindly.”

According to figures from Kantar Worldpanel, consumers’ sugar intake from soft drinks has declined by 13.6% in the UK since 2012.

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