Cllr Luke Stubbs is Deputy Leader of Portsmouth City Council.
A top aide in the former Chancellor’s team once informally explained the difference between Labour and Conservatives: “Labour want to tax people so they can decide how to spend people’s money for them. The Tories want people to keep their money. They trust people to decide how they want to spend their money themselves.”
Low taxes and self-determinism are key pillars of Conservative values. Which is why the proposed tax on soft drinks makes no sense.
The policy ignores the numbers from across the globe that prove this is an ineffective tax; in Mexico, for example, there was a slight drop in consumption following the introduction of a tax in 2014 but the next year sales began to rise again.
France,which also introduced a soft drinks tax in 2012, saw a drop of one per cent of total sales compared to pre-tax level over two years. And in Denmark before the tax was scrapped the Ministry of Taxation estimated that up to 6-7 per cent of soft drinks consumed in Denmark came from illegal activity.
From a policy perspective the plans seem ill-thought out, counter-productive and disproportionate. Furthermore, they will ultimately hit consumers and small businesses the most.
There are many holes in the policy already. The tax will not apply to all drinks. Milk-based drinks that contain added sugar will be exempt.
The tax will also be applied per litre of product, not grams of sugar – meaning we could see drinks containing more sugar per 100ml attracting a lower tax per gram of sugar, a point which has been raised by the IFS.
The IFS are not alone in highlighting flaws in the design of the tax.
The Office for Budget Responsibility – set up by Osborne himself in 2010 to provide independent analysis of the government’s spending decisions – has also highlighted the tax will be ‘passed entirely on to the price paid by consumers’.
By its definition as an indirect tax, it will also hit those on lower incomes harder.
It’s even more worrying then that the Government has not produced an impact assessment of the tax – something that is typically produced for measures announced at budgets and legislated through annual Finance Bills.
The impact on industry, not to mention the supply chain, down to convenience stores and local shops, has not been considered. And there has been little consultation on a local level within the party on this move.
How the tax will impact our local high streets and communities has not been raised in this debate; 91,000 retail jobs are directly reliant on the sale of soft drinks.
The soft drinks sector is the fifth biggest contributor to convenience store sales. It also accounts for £1 in every £20 spent in the hospitality sector. Soft drinks are key to the sustainability of local shops and pubs in constituencies across the country.
The soft drinks industry supports farmers, shops and local communities.
A tax will have consequences which won’t be able to be absorbed by some of the smaller businesses.
Retail News has said it will cost individual retailers £8,100 per year in sales. No small amount for small businesses.
We are the party of business. And this tax is not pro-business.
Small businesses have enough red tape which the government has already committed to cut – not add to.
With the UK currently third in the world in the Nanny State Index, we should be reducing taxes which aim to dictate behaviour, not introducing more.
Since 2012, the soft drinks industry has reduced its calorie content by over 13 per cent. In 2015, they agreed a calorie reduction goal of 20 per cent by 2020.
As a party we should be supporting these efforts particularly as studies have shown, reformulation has a far bigger impact when it comes to tackling obesity, than taxing behaviour.
The soft drinks tax was a fizzy spin act, designed to detract from the details of the budget this year. Now that the Chancellor has gone, so too should this un-conservative tax.
I hope the core values of the Conservative Party – as the party for businesses and hardworking people, not a party of red tape and the Nanny State – prevail.