Sugar tax to be introduced in budget
The Minister for Finance, Michael Noonan is set to announce a sugar tax in next month’s budget. However, the implementation of the levy for this may be delayed until 2018. It is believed that Mr Noonan will commit to introduce a new tax on sugar-sweetened drinks. There have been similar moves in the UK.
There are increasing concerns over the obesity levels in Ireland, especially amongst children. Hence the motivation to introduce a sugar tax. Ireland has one of the worst EU records in recent years and has difficulty in tackling the issue of higher number of obese adults and children.
The soft beverage industry has fiercely resisted the possible introduction of a sugar tax, claiming that it will not solve the problem of obesity. It has been claimed by the Irish Beverage Council that an average additional household spend would equate to €60 each year. The Council also claims that Republic based companies would lose out to Northern based companies if such a move were to be introduced, estimated at over €60 million to the drinks industry.
A senior Government source has stipulated that the proposed tax would generate some income for the State (but reiterates that this is not its primary purpose). If the introduction were to be delayed until 2018, it would not affect 2017 budgetary calculations.
The Programme for Government has also committed to increases in taxes on tobacco and the establishment of a new ‘rainy day fund’, the gradual phasing out of the Universal Social Charge and the full implementation of The Lansdowne Road Agreement.
Mr Noonan may be able to use the healthy 2016 exchequer returns as leverage to gain more leeway for spending in the upcoming budget.