'Pudding tax' - PKF Francis Clark
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‘Pudding tax’

‘Pudding tax’ – play on words that goes down a treat (but ignores the bigger issue?)

Wow. This week, I googled ‘food tax’ and discovered that an issue that was in the news during the lead up to Christmas has resurfaced, following the tabloid press picking up on comments from Cabinet Minister Liz Truss.

How we have got to where we are and why do I care?

The underlying issue would appear to be the “health of the nation” and specifically the pressures that diets heavy in sugar, salts and processed fats are having on the National Health Service.  I am not an expert in health matters, and this blog post is written by me in my capacity as a member of PKF Francis Clark’s Food and Drink team so, in that capacity, I am interested in legislation that may impact on businesses operating in that sector.

The sequence of the recent events that have got to the headlines this week such as – ‘Sugar is #notguilty’ can be summarised as follows:

  • Obesity statistics – for example “In England, more than a third of children are overweight or obese by the time they leave primary school; They are also more likely to become overweight or obese adults, increasing their risk of type two diabetes, heart disease, and some cancers and treating obesity costs the NHS £6.1 billion a year.”
  • A sugar tax – was introduced in April 2018, but it just applies to fizzy drinks. The levy is applied to manufacturers, whether they pass it on to consumers or not is up to them. There are 457 producers registered for the levy.
    • Drinks with more than 8g per 100ml face a tax rate equivalent to 24p per litre.
    • Those containing 5-8g of sugar per 100ml face a slightly lower rate of tax, of 18p per litre
  • Chief medical officer Dame Sally Davies’ report – issued just before Christmas details “plans to create a healthier nation by 2040, with the focus on improving the environment we live in to make it easier for people to be healthier.” She has called for taxes on unhealthy food high in sugar and salt and said her dream was to make fruit and vegetables cheaper for everyone from the proceeds
  • Public Health England – states that “Children have already exceeded the maximum recommended sugar intake for an 18 year old by the time they reach their tenth birthday” or “still consuming around 8 excess sugar cubes each day, equivalent to around 2,800 excess sugar cubes per year”
  • Dr Tedstone – says in response to a question as to whether the sugar tax would be extended “If we see less progress [in producers reducing the sugar content of their products], there would be a case for fiscal measures.”

And then Liz Truss tweeted with #freedomtochoose and retweeted a tweet stating that sugar consumption is already falling with #notguilty prompting articles from the tabloid press and associated reader comments including “I am just waiting for the day when they start taxing us for breathing air…”

Related to the above are draft PHE proposals to cap the calories on products, including sandwiches (550) and pizzas (1,040).

What next?

Maybe I am naive to believe the statistics on the numbers of obese and overweight people in the UK and the associated cost to the NHS.  But if these are true and these are negatively impacted by diets heavy in sugar, salts and processed fats then it can only be a matter of time before the government’s cost v benefit calculations force it to intervene through legislation and/ or taxes.




FEATURING: Richard Wadman
Richard qualified as a Chartered Accountant with KPMG in 1993. Since 2006 he has worked in Corporate Finance, firstly with the predecessor firm in Truro… read more
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