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Sugar tax will raise less money than expected Soft drinks tax raises less money than forecast as firms cut sugar content
(35 minutes later)
A sugar tax on soft drinks will raise less money than expected because companies have started making their products less sweet to avoid extra costs, the chancellor, Philip Hammond, has said. A sugar tax on soft drinks will raise less money than expected because companies have started making their products less sweet to avoid extra costs, the chancellor has said.
According to tax and spending forecasts in the budget, the levy will raise around £385m a year, less than expected. According to tax and spending forecasts in the budget, the levy will raise about £385m a year, less than expected.
“Unusually for a chancellor I am delighted to announce a reduction in the expected yield of a tax, the soft drinks levy,” said Hammond. “Producers are already reformulating sugar out of their drinks, which means a lower revenue forecast for this tax.” “Unusually for a chancellor I am delighted to announce a reduction in the expected yield of a tax, the soft drinks levy,” said Philip Hammond. “Producers are already reformulating sugar out of their drinks, which means a lower revenue forecast for this tax.”
He said £1bn from the tax, set at 18p a litre or 24p for the sweetest drinks, would go to the Department for Education to fund sport in schools.He said £1bn from the tax, set at 18p a litre or 24p for the sweetest drinks, would go to the Department for Education to fund sport in schools.
Irn-Bru maker AG Barr has moved to make Scotland’s best-known fizzy drink less sugary, though larger firms such as Pepsi and Coca-Cola are yet to make any such commitment.Irn-Bru maker AG Barr has moved to make Scotland’s best-known fizzy drink less sugary, though larger firms such as Pepsi and Coca-Cola are yet to make any such commitment.
While soft drinks will be taxed more heavily, duty on wine, beer and spirits will continue to rise in line with inflation. This will add 2p to a pint of beer, 8p to a bottle of wine and 40p to a litre of gin.While soft drinks will be taxed more heavily, duty on wine, beer and spirits will continue to rise in line with inflation. This will add 2p to a pint of beer, 8p to a bottle of wine and 40p to a litre of gin.
“It is disappointing that the chancellor has failed to support a great British industry,” said Miles Beale, chief executive of the Wine and Spirit Trade Association.“It is disappointing that the chancellor has failed to support a great British industry,” said Miles Beale, chief executive of the Wine and Spirit Trade Association.
“Between Brexit’s impact on the pound and rising inflation the wine and spirit businesses face a tough trading landscape.”“Between Brexit’s impact on the pound and rising inflation the wine and spirit businesses face a tough trading landscape.”
The budget also set a new minimum excise duty on cigarettes – £5.37 on a packet costing £7.35 – a plan the government said would “target the cheapest tobacco”.The budget also set a new minimum excise duty on cigarettes – £5.37 on a packet costing £7.35 – a plan the government said would “target the cheapest tobacco”.
Analysts at City stockbroker Jefferies said this could boost the trade in illicit cigarettes but might also help cigarette firms by making their cheaper products less attractive.Analysts at City stockbroker Jefferies said this could boost the trade in illicit cigarettes but might also help cigarette firms by making their cheaper products less attractive.