A sugar tax of 10 cent on cans of soft drink will increase the average household’s annual grocery bill by €60, but won’t help tackle Ireland’s obesity problem, said the Irish Beverage Council (IBC).
The group, which represents companies that sell sugary drinks in Ireland, has produced a report arguing sugar taxes do not achieve public-health objectives, and instead cause “economic damage to consumers, business and the Irish economy”.
IBC’s pre-budget submission, called Sugar Tax: All Cost, No Benefit, suggests Irish soft drinks companies could lose sales worth about €60 million a year to Northern Ireland as a result of the planned levy, while Exchequer VAT revenues could also be hit.
It said the estimate of lost sales was based on the consumer behaviour after currency market movements created a similar price gap between groceries priced in sterling and euro.
Food-based “sin” taxes are regressive and have a disproportionate effect on low-income households, it also argues.
“A sugar tax may be populist, but it is simply not supported by evidence,” said IBC director Kevin McPartlan.
The organisation, which is affiliated to employer group Ibec, noted that VAT was already applied to sugar-sweetened drinks at the standard 23 per cent.
This could be lost to the Exchequer if a separate sugar tax is introduced ahead of the UK and provides enough of an incentive for cross-border trade in soft drinks, the industry argues.
The potential lost VAT revenue could be €35 million per year, it estimates.
“Any attempt to introduce a soft drinks tax prior to the UK’s potential implementation would create a significant differential to the price of products sold north and south of the border,” said the report.
A sugar tax in the UK is not due until 2018.
Britvic Ireland chief executive Kevin Donnelly told the Irish Times business podcast last month that the combination of weak sterling and the introduction of a sugar tax in the Republic before Northern Ireland “would drive quite a wedge in pricing between the two parts of Ireland”.
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