Soft drinks makers contemplate legal action against government over sugar tax

Soft drinks manufacturers, including Coca Cola, are reportedly contemplating bringing legal action against the government over Chancellor George Osborne’s proposed ‘sugar tax.’

Leading soft drinks makers are considering issuing a legal challenge to the government’s proposed tax on sugary drinks.

The government is reported to be involved in negotiations with drinks manufacturers to avoid legal proceedings being brought before the European courts challenging the legality of a sugar tax.

The proposed tax will add 24p a litre to soft drinks with the highest sugar content – a cost that could be met by consumers in the form of higher prices.

Drinks manufacturers could claim that the tax is discriminatory because it will not be imposed on other drinks with a high sugar content, such as milkshakes, fruit juice and even coffee. A similar tax has been successfully challenged in Scandinavia.

If the drinks makers’ arguments carry weight with the court, the government could be forced to abandon the tax.

The Office for Budget Responsibility says the tax will cost £1bn to implement – nearly twice the £520m it is expected to raise, which has caused some to question the wisdom of the tax.

In an interview with The Guardian, Gavin Partington, director general of the British Soft Drinks Association, said: “This just reaffirms our view that this tax is ill-considered. The evidence does not suggest it will be effective and taxpayers will be left paying a heavy price for it.”

Speaking on the issue of potentially taking legal action, he concluded: “At this stage, all options are on the table. We need clarification about how this tax is going to work, exactly what’s excluded and what’s not. Nothing can be ruled out at this stage.”

Commenting in Retail Week, Leendert Den Hollander, vice-president and general manager of Coca-Cola, said that a sugar tax would not lower childhood obesity.

He said: “We just believe there’s no proof or evidence that sugar tax works. There’s no evidence that calories significantly reduce after sugar tax.”

Coca-Cola also did not rule out the possibility of taking legal action.

The government defended the proposed tax, outlining the purpose of the tax and the timetable for implementation.

A HM Treasury spokesperson said: “He [George Osborne] introduced a new levy on the soft drinks industry to pay for a doubling of dedicated sport funding for every primary school in the country, a huge expansion of breakfast clubs to ensure that every child gets the best start to the day and new funding for a longer school day.

“The chancellor also made clear that this was a policy aimed at driving meaningful change. The new levy will not be introduced until 2018, giving companies plenty of time to change product mix and reduce sugar content.”