Lovers of milkshakes and lattes face tax hikes as Labour confirmed it is extending the ‘sugar tax’.
Wes Streeting announced that the exemption for pre-packaged milk-based drinks is being scrapped.
He also declared that the threshold for the levy is being lowered from 5g of sugar per 100ml to 4.5g – potentially dragging in many more drinks.
‘This government will not look away as children get unhealthier,’ the Health Secretary told the Commons.
The move is being billed as part of a crackdown on obesity – but it could also raise as much as £100million a year for the Treasury.
That will be welcome to Chancellor Rachel Reeves as she desperately tries to fill a yawning gap in the public finances at the Budget tomorrow.
The change, which follows a consultation, will affect packaged milkshakes and coffees, but not drinks made in cafes and restaurants.
The exemption for milk-based drinks will be replaced with a ‘lactose allowance’ to account for the natural sugars in the milk component of the drinks.
The so-called ‘milkshake tax’ would axe the exemption that currently stops milk-based drinks from being eligible for the levy
Wes Streeting announced that the exemption for pre-packaged milk-based drinks is being scrapped
Ministers are removing the exemption for milk substitute drinks, such as oat milk, which have ‘added sugars’ beyond those derived from the principal ingredient.
Currently the Soft Drinks Industry Levy sees companies pay a minimum of 18p per litre on soft drinks which contain 5g or more of sugar per 100ml.
However, that is being reduced to 4.5g per 100ml – a change that would come into effect in April 2027.
Introduced in April 2018, the Soft Drinks Industry Levy is a UK tax on added sugar soft drinks.
The aim of the legislation was to put pressure on producers to reformulate their products to reduce the sugar content – or reduce portion sizes.
The idea was that the levy would also encourage importers to import reformulated drinks with low added sugar to encourage consumers of soft drinks to move to healthier choices.
The Treasury says the levy has led to a 46 per cent average reduction in sugar between 2015 and 2020 for those soft drinks that were to be brought under the rules.
Health minister Karin Smyth told Times Radio on Tuesday that ‘obesity is the major challenge of our health service for this generation’.
Asked whether tackling obesity was more important than raising revenue, she said any tax measures would be set out in the Budget but ‘the wider point is about tackling obesity, which we know is one of the biggest causes of ill health, and therefore demand on the health service’.
She added: ‘Measures we’ve already announced as part of the manifesto, to reduce junk food advertising, particularly to protect young people from becoming obese, because if you become obese at a young age, it does limit your life chances…
‘Obesity is the major challenge of our health service for this generation, and it is important that we make sure that we create the healthiest young generation of children coming forward.’
