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Sugar tax: Revenue from it more than doubled from €16m to €33m last year

The tax was brought in to try reduce the harm caused by sugary drinks on Irish people’s health.
Sep 28th 2020, 6:10 AM 16,475 15

THE GOVERNMENT RAISED €33 million through the sugar tax last year, almost €2 million lower than had been forecast. 

The amount raised in 2019, however, was more than a doubling on the €16.3 million raised through the sugar tax the year before. 

The aim of the tax is to help improve the health of the nation, and help to play a role in reducing levels of obesity among the population. Rather than actually raise a significant amount of money for the Exchequer, the idea is to help change behaviours around consuming sugary drinks. 

The move was opposed by drinks companies who claimed that adding an extra tax on such products didn’t improve health outcomes.

The sugar tax, although long-mooted, was first introduced by the government in Budget 2018. It didn’t come into effect, however, until 1 May 2018.

It works out as roughly 25-30c on a litre of popular soft drinks. It means that a can of Coca-Cola increased by around 10c.

While the government said it was difficult to predict how much the tax would raise, it did forecast at least €27 million in the first year. At the time, Minister for Finance Paschal Donohoe said up to €40 million could be raised from the tax over the course of a year. 

According to figures from Revenue, that figure was actually €16.3 million in 2018. 

Responding to parliamentary questions, Donohoe said that it was expected it would raise €35 million in 2019. 

He said early last year: “The primary purpose of this tax is to change behaviour rather than to raise revenue. As such, the early indications are that the tax is working effectively in reducing the volume of sugar sweetened drinks being consumed in Ireland.”

The total amount raised last year was €33,043,306, almost €2 million short of expectations.

So far this year, the tax has raised €20.5 million, and the Department of Finance has said it should raise €32.5 million by year’s end. One cause cited for the reduced intake has been the reformulation of ingredients in some drinks companies’ products.

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In its pre-Budget submission, the Irish Heart Foundation called for the extension of the tax as well as a timetable for the introduction of new taxes that incentivise the reformulation of unhealthy products.

First on its list is a chocolate and sweet confectionery tax.

Its head of advocacy Chris Macey told “In relation to the sugar-sweetened drinks tax to date, whilst beverages containing milk fats with less than 119 milligrams of calcium per 100 millilitres came under the scope of the sugar-sweetened drinks tax in January 2019, popular brands of milk with high sugar and low calcium content continue to be exempt. This is an anomaly in conflict with the rationale for the tax and should be addressed.  

 Otherwise the sugar-sweetened drinks tax has been a resounding success. It instantly took huge volumes of sugar out of children’s diets by incentivising manufacturers to reduce sugar content, as well as reducing demand by increasing prices.
However, the impact of the tax in assisting efforts to reduce our high rates of overweight and obesity would be increased if at least a proportion of the proceeds were spent on measures to improve diets, particularly of children in disadvantaged communities.

A spokesperson for the Department of Finance, however, told that there is no plan to ringfence funding raised by the tax for initiatives targeted at reducing obesity in the Irish public.

The spokesperson said: “The Department of Health is responsible for developing an evaluation framework for the sugar tax, which will provide evidence on the efficacy of the tax from a public health perspective.

“Hypothecation (or the ring-fencing of taxes for specific and related purposes) is not a feature of the Irish tax system in general.

The Department of Finance is generally not in favour of hypothecation of Exchequer receipts as it reduces the flexibility of the Government to prioritise and allocate funds as necessary at a particular time. This constrains expenditure decisions and can distort the allocation of resources resulting in reduced value for money and sub-optimal outcomes.
An annual budget is allocated to the Department of Health as part of the Estimates process and that is assigned according to the needs within that Department, including in relation to measures to tackle the problem of obesity.
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