The tax has been introduced for sweet non-alcoholic drinks containing more than 5 g of sugar per 100 ml of liquid; in this case the tax amounts to 18 pence (approx. CZK 5) per litre of liquid. Drinks exceeding 8 g of sugar per 100 ml of liquid (e.g. Coca-Cola) incur tax of 24 pence (approx. CZK 7) per litre of drink. The new tax is estimated to increase the fiscal income by up to GBP 240 million (approx. CZK 7 billion) per year, which should be subsequently distributed to programmes supporting physical activity and balanced diet of school children. The British government announced the plan of imposing this tax already at the beginning of 2016, so that producers would have enough time to lower the sugar content of their drinks. Based on the calculation of the British Treasury, the introduction of the tax will lead to a decrease in sugar consumption in sweetened drinks by 45 million kg per year and the sugar content of up to 50% of all drinks in the United Kingdom will decrease as a result.

This tax does not concern producers of sweet foods, such as cakes or pastries. The tax was accepted by a part of the British public as the right step, but opponents object to its selective imposition only on a limited component of problematic diet and instead they call for stimulation to consume healthy food by making it more affordable.

A similar 10% tax was imposed in 2014 in Mexico as part of a solution for the increased obesity levels in the population (statistics stated that up to 70% of the population was overweight or obese). A year after the imposition of the tax, the consumption of sweetened drinks had decreased by 12%, the largest contribution to the decrease was made by low-income households. The conclusions of the research also confirmed that the decrease in the consumption of sweetened drinks coincided with an increased consumption of drinks not subject to the tax, especially bottled water. Another success story concerns the situation in Hungary, where the imposition of the so-called “fat tax” led to a decrease in the use of unhealthy ingredients for 40% of producers and the sale of products categorised as unhealthy decreased by 25%.

Statisticians agree that the effect of the introduction of the regulatory measures will be reflected in the decrease in obesity and diseases caused by excessive sugar consumption only in the long term. These measures can only achieve the maximum economic and medical effect if they are implemented at the EU-wide level, e.g. in the form of a directive or regulation. Otherwise, certain countries could find themselves in a situation similar to the one of Denmark, which cancelled a similar tax in 2013 because Danes reacted to the increase in prices of selected foods and drinks by purchasing them in Germany and other nearby countries, which suppressed the anticipated health and fiscal impacts of the tax. Based on available information, the Czech Republic is not planning to introduce a similar tax at present.

The article is part of dReport – September 2018, Tax news; Grants and investment Incentives.