Government plans to introduce a controversial ‘sugar tax’ in the upcoming Budget look set to be met by a high-profile legal challenge from the drinks industry, the Irish Independent has learned.
Drinks giants are preparing to follow the example set by the tobacco industry – which has already initiated court action against the Government’s plan for plain cigarette packaging.
Any such legal challenge could delay the introduction of a sugar tax, which proponents say will go a long way to tackling the obesity epidemic.
According to documents published by Finance Minister Michael Noonan, a 10c levy on a can of soft drink would potentially yield €100m for the Exchequer. A senior Government source said the move was “very much on the table” ahead of October’s Budget.
The source claimed the threat of legal action by figures within the drinks industry was motivated solely by concern over profits.
The looming row comes as the body representing companies such as Coca Cola and Pepsi has seized on ‘Brexit’ in a bid to stave off the introduction of a sugar tax.
The Irish Beverage Council (IBC) has claimed that the Revenue Commissioners’ capacity to collect the new tax would be “stretched” as a result of the decision by Britain to leave the EU.
The IBC’s pre-budget submission, seen by the Irish Independent, also warns that the introduction of a sugar tax would result in an increase in illegal trade.
“We believe that the impact of the UK’s decision to leave the European Union (Brexit) must be assessed before rushing into imposing an additional tax which could cause issues for UK-Ireland Trade,” the document states.
“The ability of Revenue systems to manage the projected increase in customs declarations would be further stretched by the inclusion of a requirement to report on sugar in soft drinks.
“There are significant difficulties posed in controlling illegitimate trade imports from the UK unless any proposed Irish tax is aligned with the UK.”
The IBC says because there is no sugar tax in the North, any such move to introduce one in the Republic would cause major difficulties.
The document also calls on the Government “to consider the consumer health risks in the case of the development of unregulated counterfeit products.”
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