Fresh doubts over new sugar tax

The government has yet to notify Europe of its intention to introduce the levy

Fresh doubts over new sugar tax

A spoonful of sugar sits beside the word tax spelled out in sugar. Image: Brian Lawless/PA Archive/PA Images

There are fresh doubts this morning over the introduction of the government’s new sugar tax.

The Sunday Business Post (SBP) reports that the Department of Finance has yet to notify the European Commission of its intention to introduce the levy – as it is obliged to do under European law.

The department has not explained why it has not submitted its notification - but has confirmed the proposed tax is a matter for Budget 2018.

Officials in Britain – which plans to introduce the tax at the same time as Ireland – submitted the notification six months ago.

If introduced the tax is expected to result in a 10c rise in the price of soft drinks.

However, SBP political correspondent Hugh O'Connell said the government is running out of time if it wants to introduce the tax next year:

“Estonia dropped their plans earlier this month when they announced their budget because they had not got clarity from the EC even though they had submitted their proposal six months ago,” he said.

“So, it does raise the question as to whether Ireland has got that clarity as of yet.”

“The measure, if introduced in the budget next month, will have to be passed in the Finance Bill which has to be passed by the end of this year so it is really a race against time.”

Mr O’Connell said the tax is facing a number of difficulties including confusion exactly which drinks should be hit and reports that the potential benefit to the exchequer has been widely overestimated.

It was originally thought the tax could raise around €100m – but that figure has now dropped to around €40m.

“You have got a situation here where the government has vastly overestimated what they think the sugar tax will bring in,” said Mr O’Connell.

“Most political parties think it is a good idea.

“The general public probably think it is a good idea – although they perhaps won’t be too happy about paying an extra 10c for their soft drink.

“But it is questionable as to whether it is going to raise sufficient money for the government to be able to spend it on measures in health for example.”

The government hopes to introduce the tax from April of next year.