The days when arguing the relative cake/biscuit status of Jaffa cakes was considered a quirky example of British justice in action are long gone, now that the huge health impacts of high sugar consumption have been conclusively proven. The NHS and hence British taxpayer are paying the price of unfettered access to cheap, high sugar food and drink over 30 years or more. With two thirds of British adults overweight or obese, the health impacts are very clear including heart disease, lung disease, diabetes, high blood pressure, impaired immunity and chronic inflammation and of course recent tragic additional susceptibility to COVID-19.
The idea of a “sugar tax” has been mooted for many years but only sugary drinks have so far been tackled via the 2018 Soft Drinks Industry Levy. Reliance on voluntary reductions of sugar content by manufacturers has produced only snail’s pace improvements and yet the raft of measures introduced by the Government in July 2020 in response to COVD-19 obesity implications still skirted the issue.
The 1994 VAT legislation and VAT Guidance Notice 701/14 (Food products) could most mercifully be described as a mass of contradictions where sugary foods are concerned. If the intention of the regulation is to distinguish different types of food by their differing tax rates, exactly what distinction are we trying to make? Between home cooked foods and manufactured? Between essential foodstuffs and luxury items? Healthy versus unhealthy? Any legislation which can classify chocolate as a luxury item meriting 20% VAT while simultaneously classifying it as a baking essential with no VAT at all needs urgent revisiting. Chocolate covered shortbread? Taxed at 20%. Chocolate covered marshmallow teacake? No tax. Crystallised ginger? Taxed at 20% Ginger in sugar syrup? No tax. The distinctions are unfathomable.
There is a real opportunity to change consumption behaviour of high sugar foods by applying VAT to them all equally at standard rate. Correcting the existing anomalies in VAT treatment would not require any new form of tax and manufacturers could politely be reminded that they are lucky to have got away with the contradictions for so long. Foods could simply and easily be categorised according to the overall level of sugars they contain, a calculation already required by law for nutritional disclosure. The baseline level of sugars per 100g triggering standard rate tax could be set by medical advisers. Foods containing sugars below that level would be taxed at 0%. The only foods meriting a little more debate might be processed honey and processed sugar itself.
Doubtless there would be much wailing but just as crude oil and natural gas producers are having to face up to the fact that they have built their enterprises around substances which have been newly assessed as harmful and hence must adapt their outputs to survive, so must our food manufacturers. The technologies to reduce sugar content substantially are improving all the time and manufacturers will need to make that investment to ensure their futures.
References to “sin tax” and “nanny state” are unhelpful. Why should the Government effectively subsidise the consumption of foods which are known to be harmful to health through anomalies in the VAT categorisation? There is no obvious common-sense argument for why a square of millionaire’s shortbread should be taxed differently from a chocolate biscuit once anomalous technicalities are ironed out, so let’s iron them out and tax them the same. The choice to buy these products will remain but the increased price may help people think of them once more as luxury items and encourage a change in consumption.
It took many years for the public to appreciate the health risks inherent in both alcohol and tobacco consumption and accept the higher associated taxes for both. It will doubtless be a similarly long road with sugar. However, many of us need help to reduce sugar consumption and lose weight and sorting out these VAT anomalies for high sugar foods would be a simple and straightforward first step.
699-11