Proposed fat tax on f izzy drinks could net government sweet €250m windfall

FINANCE Minister Michael Noonan could secure a €250m windfall from the government’s proposed fat tax on fizzy drinks, an internal Department of Finance report has revealed.

The Programme for a Partnership Government has promised that increased public spending and reductions in personal taxes will be funded through, among other things, a new tax on sugarsweetened drinks.

Responding to queries by Sinn Féin finance spokesperson Pearse Doherty as to how this would operate, Mr Noonan said that this had been examined by the General Excise Duties Tax Strategy Group (TSG) in his Department.

The internal documentation, seen by the Irish Mail on Sunday, reveals that increasing the price of a 330ml can of a sweetened drink by 20 cent would raise €243m. In their first full year of billing, Irish Water collected just €144.2m.

A 10 cent increase, by contrast, would raise €121.7m.

Significantly, when it comes to the department’s thinking, the TSG paper cites the request by the Irish Heart Foundation that prices be increased ‘by at least 20 per cent’ to curb obesity amongst children and younger people.

‘In order to have a nontrivial effect on consumption and thereby impact on obesity levels and health related issues, the price shift induced by the level of taxation should be high, typically over 10 per cent,’ the report states.

The TSG also warns that ‘the State should guard against introducing a tax that cannot be fully collected or that costs more to collect than it raises’.

The investigation also reveals that any new tax would have a particularly heavy impact on multi-pack, large volume and own-brand sales of fizzy drinks.

Significantly, the study also notes Ireland historically levied a form of excise duty on ‘table waters’, which included most categories now considered fizzy drinks, between 1916 and 1992.

The report also claims that every 10 per cent increase in the price of fizzy drinks results in a 1.25 per cent decrease in obesity rates.

Currently Ireland has one of the highest obesity rates in Europe with 53 per cent of the adult population being classed as overweight, of whom 24.5 per cent are clinically obese.

Health campaigners, including the Irish Heart Foundation, have urged for its introduction, but the food and drinks industry has argued against the tax.

‘Ireland has one of the highest obesity rates’