Department of Health sought 27% tax hike on sugary drinks
The Department of Health wanted to hike the tax on sugary drinks by more than a quarter in the budget because of a sharp rise in the sale of energy drinks.
The department was looking for a 27% increase in the tax levied on soft drinks saying it was needed to keep up with inflation.
They also said while manufacturers had cut sugar levels in their drinks, demand had been rising for more unhealthy energy beverages.
A submission prepared for Finance Minister Jack Chambers ahead of Budget 2025 said: “[This] raises public health concerns not just for sugar intake but also high levels of caffeine intake.”
It said the exchequer take from the sugar tax was running at around €30m per year and that it had helped cut sugar consumption by consumers.
“There is also evidence that there has been product reformulation, with four out of five of the leading soft drinks brands falling outside of the tax altogether,” it said.
Two concerns were detailed however, including a rise in consumption of sugar drinks from 30m litres in 2020 to 40m litres last year.
Department officials said it was also clear that most bars, hotels, and shops were setting the same price for non-diet drinks as for the diet versions.
The submission said: “This undermines both the differential pricing disincentive and the signalling mechanisms through which the [tax] can potentially influence healthier choices.”
Mr Chambers opted not to make any change however, in Budget 2025 opting only for a €1 increase on the price of cigarettes in dealing with the “old reliables”.
Civil servants had also put forward two possible increases in betting tax that could have raised between €12m and €25m annually.
The submission explained that small bookmakers were warning more shops would close if the tax was increased.
However, officials said it was difficult to tell how much of that was down to the “overall sectoral shift towards online betting.”
Jack Chambers opted to leave duty on alcohol untouched with officials saying taxes on booze were among the highest in the EU. Picture: Moya Nolan
The submission did say BoyleSports had said any increase would have a “very detrimental impact” on the industry including for the major players.
No change was made to the betting tax in Budget 2025.
On yet another €1 hike in cigarette duty, Mr Chambers’s officials warned that any price increase was likely to be offset by changes in consumer behaviour in terms of tax collection.
“[Research shows] notable increases in the volume of products being consumed outside the scope of Irish excise duty,” said the submission.
“[This] raises concerns that price increases may be creating greater incentive for black market activity.”
Mr Chambers also opted to leave duty on alcohol untouched with officials saying taxes on booze were among the highest in the EU.
In their own pre-budget submissions, the drinks and pub industry had sought cuts saying members had been hit badly by rising costs including sick leave obligations and minimum wage increases.
On the other hand, public health lobbyists had said the absence of rate increases was undermining public health objectives.
The submission said: “They point out that with no general increase in duties in a decade, the value of excise duty has dropped in real terms since 2013.”
Department of Health sought 27% tax hike on sugary drinks
https://www.irishexaminer.com/business/economy/arid-41543785.html
