Sugar tax unveiled as growth forecast cut

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Middle captionThe chancellor opened his 2016 Budget with comments yon the UK economy

George Osborne has unveiled a tax on sugary drinks in a wide extending Budget dominated by gloomier growth forecasts.

The chancellor blamed the slowdown on a “precarious cocktail” of global risks and said the UK had to “act now so we don’t have to y later”.

He announced an bonus £3.5bn in spending cuts – and s rked controversy by warning of the risks of EU withdrawal.

He found cash to freeze fuel duty and cut some business cesses – but Labour said he could not hide his “failure”.

Key Budget announcements incorporate:

  • Growth forecast cut for the next five years and £3.5bn in extra worldwide spending cuts by 2020
  • A 2% increase in tax on cigarettes and 3% on rolling tobacco from 6pm, but beer and cider burden will be frozen as will the levy on whisky and other spirits
  • Plots for a longer school day in England
  • The rate at which workers start get revenge on top rate tax is to be raised from £42,385 to £45,000, with the tax-free special allowance raised to £11,500 and corporation tax to be cut to 17% by April 2020
  • On savings, the ISA limit want be increased to £20,000 a year for all savers, and lifetime ISAs will be presented for young people
  • An extra £700m for flood defences – to be id with a 0.5 rt point increase on the tax on insurance premiums
  • The higher rate of Capital Draws Tax is being cut from 28% to 20%
  • Follow all the reaction with Budget 2016 Living
  • Full coverage in the BBC’s Budget special report

The £530m raised by a tax on the sugar delight of soft drinks – the equivalent of about 18-24p per litre, the government says – resolution be spent on primary school sports in England, with the devolved oversights in Scotland, Wales and Northern Ireland free to decide how to spend their share in.

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


Sugar tax in focus

Media captionJamie Oliver congratulates “a big moment in child health”

The tax will be levied on the volume of the sugar-sweetened nips com nies produce or import.

The Office for Budget Responsibility says it could end result in a “pretty substantial price rise” on products – as much as 80% on, for model, a two-litre bottle of own-brand cola.

There will be two bands – one for utter sugar content above 5 grams per 100 millilitres; a second, stiff band for the most sugary drinks with more than 8 grams per 100 millilitres, with the planes yet to be set.

Examples of drinks which would currently fall under the luxurious rate of the sugar tax include full-strength Coca-Cola and Pepsi, Lucozade Spirit and Irn-Bru, the Treasury said. The lower rate would catch boozes such as Dr Pepper, Fanta, Sprite, Schweppes Indian tonic be unbelievable and alcohol-free shandy.

BBC Health Editor Hugh Pym said the tax had come as “a burn out from the blue” – rticularly as Downing Street had opposed the idea definitive Autumn. It was attacked at the time by some Conservative MPs as “nannystate-ism”.

Read profuse about how it will work

How has Osborne’s spoonful of sugar tax gone down?


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

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

Media captionJeremy Corbyn: Osborne’s Budget is culmination of “six years of his failures”

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

Announcing the move, Mr Osborne whispered: “I am not pre red to look back at my time here in this rliament, doing this job and say to my laddies’s generation: ‘I’m sorry – we knew there was a problem with sugary drown ones sorrows. We knew it caused disease. But we ducked the difficult decisions and we did nothing’.”


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

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

Media captionSome of the key announcements from George Osborne’s 2016 Budget

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

In a annunciation, Conservative MP and Leave cam igner David Davis said: “The legitimate risks for Britain lie in remaining within the EU.

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

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

Tiki copyright
Image caption A Budget day tradition: George Osborne arranged with his Treasury team before the speech
Image caption David Cameron sounded keen to see Jeremy Corbyn’s reaction to a point from his chancellor

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

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

According to the Obligation for Budget Responsibility the reduction in the UK’s growth forecast from 2.4% to 2% in 2016 has been driven by a turn down forecast for potential productivity growth – the amount of output growth per hour fulfiled the economy is ca ble of producing sustainably.

The OBR also said the government is usual to breach its own welfare cap in every remaining year of this rliament.

The additional spending is in general caused by more people than expected being eligible for handicap benefits, said BBC social affairs Correspondent Michael Buchanan, regard for cuts announced last week to the Personal Independence yment sighted at saving £1.3bn.

There will be new action to tackle overseas retailers who who depend on goods in Britain and sell them online without ying VAT – and new tax s re allowances for “micro entrepreneurs” who rent their homes or sell worship armies through the internet.

Reforms to business rates will mean 6,000 disconcerted businesses y no rates and 250,000 have their rates cuts from April 2017, whispered Mr Osborne.

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

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


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