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Ireland secures European Commission approval to tax sugary drinks

Published 26 April 2018

Ireland has secured approval from the European Commission to implement a tax on sugar drinks on health grounds.

The commission concluded that the tax does not involve State aid, but rather the measure's scope and design are consistent with the health objectives pursued by Ireland, particularly tackling obesity and other sugar-associated diseases.

Initially, the tax was to come into effect in early April, but Ireland postponed it to complete administrative process related to State aid approval.

In February this year, the Irish government notified the Commission to introduce sugar tax to obtain legal certainty that the measure will not involve any state aid within the European Union’s rules.

The Irish tax will apply to soft drinks such as water- and juice-based beverages that have added sugar with a sugar content of 5 grams or more.

There are two rates of tax with the initial 20 cents per litre will apply to drinks with 5 grams or more but less than 8 grams per 100 millilitres.  

The second rate of 30 cents per litre will apply to liable drinks with 8 grams or more of added sugar per 100 millilitres.

The Irish government said pure fruit juices are not subject to the tax, but once sugar is added to pure fruit juice the entire sugar content becomes liable.

Recently, the UK, France and Hungary have also imposed tax on sugary drinks to cut consumption.

The measures have been suggested by the World Health Organisation (WHO), which in 2016 stated that obesity has more than doubled between 1980 and 2014, with more than 500 million people being affected. WHO stated that a 20% tax could significantly reduce the consumption.

This tax is expected to generate about €30m this year and €40m in a full year.

Ireland Minister for Finance Paschal Donohoe said: “The Department of Health recommended the introduction of a tax on sugar-sweetened drinks to help reduce rates of overweight and obesity in Ireland. The tax is an important signal to the industry to reformulate their products to reduce the sugar content offered to consumers.”

“From the consumer perspective, the imposition of a financial barrier on sugar-sweetened drinks will result in reduced consumption by incentivising individuals to opt for healthier drinks,” he said.

Image: Ireland to implement tax on sugary drinks from May 1. Photo: Courtesy of tiverylucky/FreeDigitalPhotos.net.