Drinks levy leaves sour taste for some, despite pro-SME Budget

Small business groups have welcomed George Osborne’s announcement that Small Business Rates Relief is to be retained and extended, with many firms to be taken out of the system altogether.

But news of a controversial levy on drinks with added sugar has brought a more mixed response.

Delivering his eighth budget as Chancellor today, Osborne said all businesses with a rateable value (RV) below £12,000 will see 100% rate relief – up from £6,000 previously – with tapered relief for those with an RV between £12,000 and £15,000.

It means 600,000 small businesses will pay nothing in business rates and 250,000 businesses will see their rates fall. This could save a small business £6,000 per year.

At small shops group ACS,  chief executive James Lowman said the higher threshold would be “a welcome measure for thousands of local shops who are facing rising costs in other areas of their business”.

The Chancellor told MPs: “A typical corner shop in Barnstaple will pay no business rates. A typical hairdressers in Leeds will pay no business rates. A typical newsagents in Nuneaton will pay no business rates.”

The 2016 Budget also included a further freeze on fuel duty and a cut in corporation tax from 20% to 17% by 2020.

Read full details of the budget here

However, it also saw the announcement of a new sugar tax on drinks, to be paid by importers and producers. It will be calculated on a sliding scale based on the total sugar content of the drink. Pure fruit juices and milk-based drinks will not be included, and there will be exemptions for small manufacturers.

At the ACS, James Lowman said there was a wide choice of low-sugar and no-sugar drinks available to consumers at local stores, adding: “The Chancellor’s new levy on soft drinks companies would have been better considered as part of an holistic strategy to tackle obesity.”

Paul Bendit, a director of East Sussex-based Folkington’s Juices, told FFD: “The sugar tax on soft drinks is poorly thought through, and there is little if any evidence that it will achieve any material change in childhood obesity because most children also eat cakes, sweets and ice creams which are unaffected by the sugar tax.”

He pointed out that an elderflower pressé with 7.5g of sugar per 100g would attract sugar levy, albeit at the lower rate, while a bowl of Coco Pops with 35g per 100g would not be taxed.

But at Devon drinks-maker Luscombe, chairman Gabriel David said: “With the Luscombe range the effects of a sugar tax will be very small but it will help all consumers as the industry will have to lean heavily away from sweetened sugary drinks. Hopefully those large two litre bottles of “soft drinks” sold in supermarkets will become a thing of the past.”

At the Rural Shops Alliance, which represents many small independents, chief executive Ken Parsons to the various exemptions to levy and told Fine Food Digest: “As a responsible adult, I find difficult to complain about.”