Thursday 27 October 2016

Drinks giants in legal threat over 'sugar tax' moves

Michael Noonan says the tax would be worth €100m
Michael Noonan says the tax would be worth €100m

Plans to tax sugary soft drinks are set to face a legal challenge from drinks giants, the Herald has learned.

The Government plans to introduce a controversial "sugar tax" in the upcoming Budget.

But the drinks industry is already looking at a legal challenge, following the example set by the tobacco industry - which has initiated court action against the Government's legislation on plain tobacco packaging.

Any legal challenge could delay the introduction of a sugar tax, which proponents say will go a long way to tackling the obesity epidemic.

According to documents published by Finance Minister Michael Noonan, a 10c levy on a can of soft drink would potentially yield €100m for the Exchequer.


A senior Government source last night said the move was "very much on the table" ahead of October's Budget.

The source added that the threat of legal action by figures within the drinks industry was motivated by concern over profits.

The looming row comes as the body representing companies such as Coca-Cola and Pepsi has seized on Brexit in a bid to stave off a sugar tax.

The Irish Beverage Council (IBC) has claimed that the Revenue Commissioner's capacity to collect the new tax would be "stretched" as a result of Britain's decision to leave the EU.

IBC's pre-budget submission, seen by the Herald, warns that the introduction of a sugar tax would result in an increase in illegal trade activity.

"We believe that the impact of the UK's decision to leave the European Union [Brexit] must be assessed before rushing into imposing an additional tax which could cause issues for UK-Ireland Trade," the document stated.

"The ability of revenue systems to manage the projected increase in customs declarations would be further stretched by the inclusion of a requirement to report on sugar in soft drinks.

"There are significant difficulties posed in controlling illegitimate trade imports from the UK unless any proposed Irish tax is aligned with the UK," it adds.

IBC said because there was no sugar tax in the North, any move to introduce one here would cause difficulties.

There are also concerns about cross-border smuggling, consumer health and businesses and "health risks in the case of the development of unregulated counterfeit products".

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