How officials overestimated sugar tax take

A TAX on sugary soft drinks will rake in far less than previously thought – because they have been made healthier and consumption was heavily overestimated.

The so-called ‘sugar tax’ was announced by former chancellor George Osborne last year as part of a push to tackle Britain’s obesity epidemic, and will be introduced in April.

It was originally expected to raise £520million from two tax bands – one on drinks with more than 5g of sugar per 100ml, and another higher rate for drinks with more than 8g.

This estimate was cut to £380million in March because producers were already cutting down on sugar levels to avoid getting caught out.

The predicted tax take was slashed again to £275million yesterday on advice from HMRC – little more than half the amount that was once hoped for.

According to the watchdog – the Office for Budget Responsibility – previous research had heavily overestimated the amount of soft drinks consumed in pubs, cafes and restaurants.

It said that data firm Mintel had been forced to announce ‘a large downward revision to the historical data on soft drinks consumption that underpins the forecast’.

The OBR said: ‘It means the levy is expected to affect a smaller tax base.

‘Our latest forecast is almost half the level of the initial estimate from the 2016 Budget, reflecting both the lower tax base estimate as well as upward revisions to our reformulation assumption.’

After calls from health campaigners, Mr Osborne unveiled the sugar tax in March 2016, saying the extra cash raised would be used to boost sport in schools.