The European Commission has formally cleared the way for Ireland’s sugar tax.
The Commission concluded that the €30m sugar tax on fizzy drinks, which comes into effect next month, does not involve State aid.
In a statement this morning the Commission described the Government measure’s scope and design as being “consistent” with its health objectives, namely in the area of tackling obesity and other sugar related diseases.
Earlier this year the Irish Government notified the Commission of its plans to introduce a sugar tax in order to obtain legal certainty that the measure did not involve any State aid within the meaning of European Union rules.
While it is the right of Member States such as Ireland to decide on the objective of different taxes and levies, in order to comply with EU State aid rules, Member States must design taxes in a way that does not discriminate.
The Commission in its assessment found that soft drinks can be treated differently to other sugary products under the grounds of health objectives.
The sugar tax will see a levy of 16c per litre for drinks with between 5-8g of sugar per 100ml. It will rise to 24c per litre for varieties with more than 8g.
When VAT is included this works out at 20c per litre for drinks with between 5-8g of sugar per 100ml, and 30c per litre for drinks with more than 8g of sugar per 100ml.
The tax is expected to generate €30m in 2018 and €40m in a full year.
Unlike in the UK where the proceeds of the sugar tax will be directly targeted at improving sport in schools, in Ireland, receipts from the tax will go into the general Exchequer.