Ministers are poised to toughen up the so-called ‘Sugar Tax’ and extend it to milkshakes, it was revealed today.
Measures put out for consultation by the government would remove the exemption currently in place for more than 200 milk drinks.
That could potentially mean some sugary milkshakes being hit with charges of 26p per litre.
The threshold for the paying the tax would also be reduced from 5g of sugar per 100ml to 4g – potentially dragging many more products in.
The Soft Drinks Industry Levy was announced in 2016 and introduced in 2018 to ‘tackle childhood obesity’. It applies to pre-packaged soft drinks with added sugar, rather than drinks made in cafes.
However, milk-based drinks were not covered because they are a source of calcium and other nutrients.
The Budget hinted that Labour was poised to reverse that decision, and the consultation released today said: ‘Whilst young people still do not consume the recommended level of calcium, milk-based drinks are not a significant contributor to intakes.
‘Milk-based drinks only provide up to 3.5 per cent of calcium intakes for children aged 11 to 18 years, compared with 25 per cent from plain milk, and 38 per cent from cereal products, including fortified white bread.
‘When weighed against the harms of excess sugar, the contribution these drinks make to calcium intakes does not justify their continued exemption from the SDIL.
‘In the latest analysis from the Department of Health there are 203 pre-packed milk‐based drinks on the market that have a total sugar content of 5g or above per 100ml, comprising 93 per cent of sales (in litres) in the pre-packed milk-based drink category.’
There would be a ‘lactose allowance’ to account for the natural sugars in the milk.
However, many milkshakes are still likely to fall into the higher rate of the levy.
Currently the levy is £1.94 per 10 litres on drinks with 5g to 7.9g total sugar per 100ml.
A higher rate of £2.59 per 10 litres is applied to drinks with 8g or more total sugar per 100ml.
But the proposals would see the minimum sugar content at which the SDIL applies cut from 5g to 4g total sugar per 100ml.
The standard rate would apply from 4g to 7.9g total sugar per 100ml.
The consultation said of threshold being lowered: ‘This measure will have an indirect impact on individuals, families and households who consume soft drinks containing at least 4 grams of sugars per 100 millilitres.
‘This is because, where there is no reformulation, it is likely that businesses and importers will ‘pass through’ the SDIL charge to consumers in the form of increased prices.
‘However, in practice, based on evidence from when the SDIL was initially introduced, we would expect significant reformulation of soft drinks.’
The charges are due to rise by 27 per cent over the next five years to ‘catch up’ with inflation, after being frozen in cash terms since 2018.