Campaigners want €31m from sugar tax ringfenced to fight obesity

Campaigners want €31m from sugar tax ringfenced to fight obesity

The sugar tax adds around 25c to the cost of a litre of many popular soft drinks. Picture: iStock

The income from the Sugar Sweetened Drinks Tax (SSDT) fell by nearly €2m in 2020, but campaigners say the €31m it raises should be ringfenced to fight obesity.

Finance Minister Paschal Donohoe said in a parliamentary response that the tax had yielded €31.3m in 2020, down from €33.04m the year before. 

The tax was enacted in May 2018 ostensibly to tackle obesity and change purchasing behaviour and is not designed to be a revenue generator. It adds around 25c to the cost of a litre of many popular soft drinks.

However, the money raised goes to the general exchequer, with the Department of Finance consistently saying that hypothecation - or ring-fencing - is not a common feature of the Irish tax landscape.

But campaigners have pointed to the carbon tax as an example of ringfencing funds raised through taxation. 

Kathryn Reilly, policy manager with the Irish Heart Foundation said the tax has largely worked, but can be stronger.

She said while there has yet to be an evaluation of the tax, there is evidence from the UK that it has impacted consumer behaviour.

We know that in the UK that the amount of sugar has fallen 10% in the years following the levy. People are still buying the drinks in volume, so it's a win-win for industry and public health.

"In the UK, we know that there was a 28.8% drop in sugar in drinks. We know that by encouraging reformulation of the drinks, it took large amounts of sugar out of the Irish diet.

"It wasn't meant to be a revenue-raiser, but it is there to alter behaviour and act as a nudge to behavioural change. It has been a success in that regard but it could go further.

"There was an amendment to the Finance Bill which exempted milk drinks with certain calcium levels would be exempt. But some with high sugars are exempt due to an anomaly in the law."

Ms Reilly said it was important to ringfence the funds for use in health.

"Even more so due to impacts of Covid, these funds need to go into actions for kids health. If the carbon tax can be hypothocated, why not this? It is possible. Now more than ever, is the opportunity to do that."

A 2019 study found the tax could be extended to other sugary snacks to further alter behaviour.

The study - published in the British Medical Journal - found that a reduction in the consumption of high-sugar snacks has a better chance at improving people's health compared to taxing fizzy drinks.

A 20% tax on sugary snacks like cake, biscuits and chocolate could reduce a person's calorie intake by 8,900 calories over the course of a year. One in four Irish adults are obese, while one in four children is overweight.

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