The Treasury’s plans to introduce a so-called ‘sugar tax’ on fizzy drinks have been attacked by the TaxPayers' Alliance (TPA), which says the move would result in a drop of some £17m in tax revenues because of the impact on the economy and employment
The campaigning group says its analysis is based on research into the effect of a sugar tax in Mexico, which saw a 12% cut in sweetened drink sales during its first year of operation, and reckons that if implemented in the UK, there would be 5,624 fewer jobs.
This is equivalent to £90,622,346 in average industry and related sector pay, and would lead to the Treasury receiving £17,399,370 less in job-related taxes, including £11,188,648 of employee’s National Insurance contributions (NICs) and income tax and £6,210,723 of employer’s NICs.
Jonathan Isaby, chief Executive of the TaxPayers' Alliance, said:’ Not only will the sugar tax fail in its public health aims, there is a very real risk that it will destroy jobs and harm economic growth. Given it will also hit the poorest households the hardest, the already flimsy case for a sugar tax is rapidly dissolving. The government should be focusing on policies which encourage economic growth, so the sugar tax should be immediately scrapped.’
Chancellor George Osborne first mooted a sugar tax in his last budget, proposing a two-tier system with one band of tax for drinks with sugar content above 5g per 100ml, a higher levy for drinks above 8g per 100ml.
It was suggested the tax bring in £520m in its first year of operation, with the money raised used to double funding for sport in schools.
