Ireland’s sugar tax on fizzy drinks may cost the State €22m per year in lost revenue from cross-border shopping and the black market, said Colm Jordan, Director of the Irish Beverage Council.
Mr Jordan’s comments come after the Minister for Public Expenditure Paschal Donohoe announced during the 2018 Budget that a sugar tax will be introduced on fizzy drinks from April of next year.
“We are forecasting that 11% of sugar-sweetened drink sales will be lost to cross-border shopping and the unofficial grey market,” said Mr Jordan.
“That amounts to a €22 million loss to our economy in a full operating year of the sugar tax.
“This must be seen in context; the soft drink tax will only raise €40 million,” said Mr Jordan.
The Irish Beverage Council (IBC) represents companies that produce, distribute and market soft drinks, fruit juices, bottled waters, sports and energy drinks throughout Ireland.
From April onwards, a 30 cent tax will apply on drinks with over 8g of sugar per 100ml. A 20 cent tax will be added to drinks with between 5g and 8g of sugar per 100ml.
The Minister for Public Expenditure Paschal Donohoe said on Budget Day that he hopes that the measure will reduce obesity by reducing consumption of sugary drinks.
The HSE’s National Lead for Healthy Eating, Sarah O’Brien, is not too concerned about the possible revenue loss as the British Government is set to introduce a similar sugar tax.
“In relation to cross-border trade concerns, the UK Government intend to implement a similar levy from April 2018, with the levy in Ireland expected to come into force at the same time,” said Ms O’Brien.
It remains to be seen whether the government will lose revenue as a result of the sugar tax.
In 2012, the Department of Health commissioned the Institute of Public Health Ireland to carry out a report based on the health impacts of a sugar tax. The foreword of the report said that there’s no evidence that a sugar tax will reduce obesity.
“Certainly, there is no conclusive evidence that a specific tax on sugar-sweetened drinks will impact on population weight,” said the report.
In October 2016, the Department of Health introduced a new report outlining the reasons behind introducing a soft drink tax in Ireland.
“The association between SSD (sugar-sweetened drink) consumption and weight gain has been found to be stronger than for any other food or beverage,” said the report.
The Director of IBC believes that taxing soft drinks to reduce consumption is a weak argument however.
“The overly simplistic idea that taxing soft drinks impacts consumption ignores the hard evidence,” said Mr Jordan.
“If demand was based on price, ‘own brand’ soft drinks would be market leaders; they are not. Taste is a more significant factor in consumer choice than price,” added Mr Jordan.
The HSE have defended their stance on the sugar tax by saying that research shows that drinking sugar-sweetened drinks is associated with increases in many medical issues for adults and children.
“A growing body of research indicates that an increase in the consumption of [sugar sweetened drinks] is associated with increases in calorie intake, weight gain, type 2 diabetes, obesity and dental cavities, and that the consumption of [sugar sweetened drinks] may influence the development of obesity in children, adolescents and adults,” said Ms O’Brien.
As well as medical issues, the HSE have said that sugar-sweetened drinks are cheap and have no nutritional benefit to a balanced diet.
“Sugar-sweetened drinks are inexpensive, readily available, high in calories and are a source of energy with little or no other nutrient contribution to the diet.
“They are strongly associated with weight gain and are heavily marketed, especially to children,” added Ms O’ Brien.
IBC’s Director, Colm Jordan believes that the sugar tax still has faults associated with it.
“Taxing one ingredient in some sugary drinks, but not all sugary drinks, will not combat the complex challenge of obesity,” said Mr Jordan.
Sugar tax in other countries
Sugar taxes have been introduced in a number of countries and, Colm Jordan argues these taxes have very little effect on national obesity rates.
“Obesity is a complex societal issue. Where similar taxes were introduced, obesity rates increased,” he said.
In 2012 in France, the government introduced a 72 cent per litre tax on sugar-sweetened drinks and artificially sweetened drinks. This measure proved ineffective in reducing incidences of obesity.
Figures from NCD-RisC show that in 2012, 21.1% of French men were obese, as well as 21.2% of women. In 2013, those figures rose to 21.5% for males and 21.5% for females.
In 2014, obesity rates rose again to 22% for males and 21.9% for females, even with the tax in force. These are the latest figures from the NCD-RisC database.
Denmark had a sugar tax on fizzy drinks for decades. This tax amounted to about 22 cent per litre of a sweetened drink. The tax was reduced to 11c per litre in July of 2013 and was abolished in 2014.
NCD Risk Factor Collaboration, (NCD-RisC) is a network of health scientists around the world that provides data on non-communicable diseases for all the world’s countries.
In 2008, NCD-RisC released figures showing that obesity rates in Denmark were at 18.7% for males and 15.6% for females.
When the sugar tax was abolished in 2014, obesity rates for men and women had risen to 20.7% and 17.4% respectively, showing that the sugar tax had little to no effect on obesity rates.
In August 2017, a 1 cent per litre fizzy drink tax was introduced in Chicago. The Washington Post reports that by October 11th, the Cook County Board of Commissioners voted 15-1 to quash the tax, citing reasons such as future declines in fizzy drink sales for businesses.
In Ireland, obesity has increased in recent decades, with a high proportion of adults and children being overweight, according to the HSE.
“The prevalence of obesity in Ireland has increased significantly in recent decades. Currently, six in ten adults and one in four children are overweight or obese,” said Sarah O’Brien.
The success of a sugar tax depends on how the soft drinks industry responds to the measure, with marketing companies also needing to get behind the initiative, according to the HSE’s National Lead for Healthy Eating.
“The impact of the sugar-sweetened drinks tax on health outcomes is dependent on how industry responds to the measure; potential responses include product reformulation, changes in marketing practices, smaller portion sizes or increases in price to consumers.
“The current evidence indicates that substantial product reformulation by industry to remove sugar would maximise potential health benefits,” said Ms O’Brien.
The IBC’s Director believes that reformulation of sugary products would lower costs for shopping as well as benefit people’s health.
“Reformulation, rather than price hikes, will have a greater impact on consumer behaviour and calorie intake with no increase in the cost of our weekly shop.
“We are committed to working with government on solutions that deliver real public health benefits,” added Mr Jordan.
Efforts were made to contact the Department of Health for a comment on the sugar tax measure but no comment was received prior to publication.
By Leanne Salmon