Sugar tax surprise in Budget - but growth forecasts cut

Sugar tax surprise in Budget – but growth forecasts cut

Chancellor George Osborne has unveiled a tax on the makers of sugary soft drinks to tackle childhood obesity.

He revised down the UK’s growth forecast in his eighth Budget and sparked controversy by warning of the risks to the UK economy of EU exit.

He said the UK was “well placed” to handle a “dangerous cocktail” of global economic risks if “we act now so we don’t have to pay later”.

Labour said it was a Budget with “unfairness at its very core”.

Other Budget announcements include:

  • Growth forecast cut for the next five years and £3.5bn in extra public spending cuts by 2020

  • Fuel duty frozen for the sixth year

  • 2% increase in tax on cigarettes, with 3% on rolling tobacco, from 6pm, but beer and cider duty will be frozen as will the levy on whisky and other spirits

  • Plans for a longer school day in England

  • The rate at which workers start paying top rate tax is to be raised from £42,385 to £45,000, with the tax-free personal raised to £11,500 and corporation tax to be cut to 17% by April 2020

  • On savings, the ISA limit will be increased to £20,000 a year for all savers, andlifetime ISAs will be introduced for young people

  • An extra £700m for flood defences – to be paid with a 0.5% percentage point increase on the tax on insurance premiums

  • The higher rate of Capital Gains Tax is being cut from 28% to 20%.


The £530m raised by a tax on the sugar content of soft drinks – the equivalent of about 18-24p per litre, the government says – would be spent on primary school sports, the chancellor said.

Mr Osborne’s sugar tax announcement sparked a big fall in the share price of soft drinks makers but it was welcomed by TV chef Jamie Oliver, who has been campaigning for such a move. He told BBC News it was “a big moment in child health” and a “symbolic slap” to business rather than “anti-business”.

In his biggest Parliamentary test to date, Labour leader Jeremy Corbyn delivered the Opposition’s response, describing Mr Osborne’s Budget as “the culmination of six years of his failures” which had “unfairness at its core”.

The Labour leader said the financial proposals failed on productivity, investment and in tackling inequality – and gave tax cuts to the wealthy while disabled people lose more than £1bn.

But he welcomed Mr Osborne’s sugar tax, which will be introduced in two years’ time and will not apply to fruit juices or milk-based drinks.

Announcing the move, Mr Osborne said: “I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation: ‘I’m sorry – we knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing’.”

Mr Osborne announced a major overhaul of the North Sea tax regime aimed at helping the UK’s oil and gas industry, effectively abolishing the Petroleum Revenue Tax.

The SNP’s deputy leader Stewart Hosie welcomed the move – but criticised the overall Budget package, saying Mr Osborne had “failed to tackle the debt, the deficit and the borrowing as he promised” and urging him to abandon austerity and invest more in growth.

Mr Osborne said the UK was still on course to clear its deficit by 2019/20 thanks to the extra spending cuts, and he hailed his package of measures as “a Budget that puts the next generation first” and made Britain more “secure” in the world.

But in a move that has angered Conservative colleagues who think the UK would be better off out of the European Union, he cited the Office for Budget Responsibility’s view that the UK would be “safer, stronger and more secure” if voters chose to remain in the EU in June’s referendum.

Mr Osborne said the OBR had made clear its forecasts were based on the assumption the UK would remain in the EU and had warned that “there appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty”.

In a statement, Conservative MP and Leave campaigner David Davis said: “The real risks for Britain lie in remaining within the EU.

“Many of the ‘cloudy skies’ and ‘cocktail of risks’ the chancellor speaks of originate from a failing, shrinking and unstable European economy.”

Mr Osborne’s package includes a £1.5bn plan to turn all state schools into academies and allow some to have longer days.

Every state school in England will have to become an academy under the plans – meaning they are independent of local authority control – by 2020 or to have a plan in place by that date to do so by 2022.

The move would end the century-old role of local authorities as providers of education.

Schools will also be able to bid to be allowed to change their hours to suit their pupils’ needs.

In other Budget announcements, Mr Osborne committed £300m for transport projects, with the government funding the start of work on the Crossrail 2 rail line and new High Speed 3 link across the north of England.

Almost half of the transport money committed was announced in the Autumn Statement.

The government has also announced a ‘Help to Save’ scheme under which would give low-paid workers a top-up if they put savings aside.

There will be new action to tackle overseas retailers who who store goods in Britain and sell them online without paying VAT – and new tax free allowances for “micro entrepreneurs” who rent their homes or sell services through the internet.

Reforms to business rates will mean 6,000 small businesses pay no rates and 250,000 have their rates cuts from April 2017, said Mr Osborne.

Culled from BBC News






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