Last updated: 10/09/2024
Tax sugar and salt sold in processed foods
Introduce a £3/kg tax on sugar and a £6/kg tax on salt sold for use in processed foods or in restaurants and catering businesses
- High impact on obesity
A percentage estimate of how much the policy would reduce national obesity rates
- Relative reduction in obesity prevalence: 12%
- High evidence quality
A rating of the strength of evidence, accounting for both reliability and validity of the evidence
- Reliability and validity rating: 4/5
- Moderate cost to governments
Cost to UK and devolved governments over 5 years
- Costs to governments over 5 years: £28m
- Benefit to governments per year: £7bn
What is the policy?
This fiscal policy was first recommended in the National Food Strategy, and has since been supported by the campaigning group, Recipe for Change. The policy is the introduction of a levy of £3/kg which would be applied to sugar and £6/kg to salt sold wholesale for use in processed foods, or in restaurants and catering businesses. The policy is similar to the Sugary Drinks Industry Levy (SDIL), but applied to a wider portfolio of products.
The tax would apply to all sugar and other ingredients used for sweetening (such as syrups and fruit extracts, excluding raw fruit) at a rate of £3/kg. The tax would not apply to ingredients used in home cooking, which would be managed either by taxing sales to manufacturers and food service businesses or by taxing all sales of sugar and salt when they leave factory gates, subsequently allowing retailers to claim a rebate for sales to consumers. There is a possibility that small businesses could abuse the exemption, however the quantities of sugar required by larger businesses is so large that serious evasion is unlikely. For detailed information of scope, including how sugar in imported products would be taxed, please see page 2 in the National Food Strategy recommendations.
The aim of this policy is to encourage manufacturers to reformulate their products to contain less salt and sugar, and/or to make these products relatively more expensive, thereby discouraging their purchase. Where businesses do not reformulate, they may pass the cost of taxation to consumers.
Recent context
In 2016, the UK Government announced the introduction of a levy on sugar sold in soft drinks, which came into force in April 2018. The SDIL in the UK applies a flat levy of 24 pence per litre (ppl) to drinks with more than 8 grams (g) of added sugar per 100 millilitre (ml), with a lower rate of 18ppl applied to drinks with more than 5g of added sugar per 100ml. The tax rate of £3/kg proposed in the current policy is approximately the same rate as the SDIL, which the new proposed tax would replace. In response to the SDIL, most drinks manufacturers reformulated recipes to fall below the sugar tax threshold and it is hypothesised that the same approach would be taken in response to a tax on a much wider portfolio of food products.
Public Health Wales’ recent Time To Talk Public Health survey showed public support for government action to make food healthier, with 57% of people agreeing that governments should use financial tools like taxes to reduce sugar in foods with high levels.
Case studies
Public Health Product Tax (PHPT), Hungary
In 2011, Hungary implemented a national policy known as the Public Health Product Tax (PHPT). This policy imposed taxes on foods and beverages with high sugar, salt, and caffeine content, with tax rates determined by the nutrient content per 100 grams of the product. The PHPT was applied to a broad spectrum of products, encompassing soft drinks, energy drinks, salty snacks, and sugary cereals.
Initial assessments revealed that approximately 40% of manufacturers responded by reformulating their products – with 28% reducing unhealthy ingredients like salt, sugar and fat, and 12% eliminating those unhealthy components altogether. As a result, sales of the previously taxable, unhealthy products fell by an average of 27% across manufacturers. The revenue generated by the PHPT made it possible to raise the wages of 95,000 healthcare workers. The top 35 companies that paid the PHPT accounted for 83% of the revenue. Furthermore, an immediate decline in consumption of taxed products was observed. However, widening the time horizon, data suggests a consumption increase, largely due to increased taxable income.
Considerations for implementation
There is a risk that this policy would raise food prices for consumers. To address this concern, the National Food Strategy recommendation proposed that the revenue gained from increased taxation should be spent on increasing access to fruit and vegetables for people on low incomes. Governments should consider how this could be operationalised and ensure transparency when planning how revenue will be allocated.
Governments should allow an appropriate lead-in time to ensure that businesses have the time and resource to reformulate products if they wish to. Using the SDIL policy as an example, the policy was announced in March 2016. This allowed industry two years to reformulate products before the tax was implemented in April 2018.
Estimating the population impact
We estimated that this policy would reduce the prevalence of adult UK obesity rates by approximately 12%
Estimating the per-person impact
We estimated that this policy would reduce average daily calorie intake in adults by approximately 45 kcal per person
We used data reported by the Institute of Fiscal Studies (IFS) to estimate the effect on daily calorie intake. The report considered and modelled for scenarios that cover the full range of realistic possible levels of industry response – from very responsive firms and consumers to non-responsive firms and consumers (in addition to everything in between).
For our analytical modelling we choose the scenarios where industry reformulates to meet the voluntary calorie reduction targets set in the Public Health England (PHE) guidelines and consumers respond moderately by shifting away from the products by 70% of their price increase.
The IFS report finds that females aged 19-64 reduce intake by 41.1 calories per day and males aged 19-64 reduce intake by 48.6 calories per day, which averages to 44.9 calories per person per day.
Estimating the population reach
In our analytical model, we applied the effect sizes to people living with overweight or obesity. For adults, that is people aged 18 or above with a BMI of 25+. Modelling the effects of this policy for children is currently in progress and we plan to publish this once complete.
Changes in the prevalence of people living with obesity
| Adults (England and Wales) | Children (England and Wales) | Adults (Scotland) | Children (Scotland) |
| 12% | In progress | 13% | In progress |
Cost and benefits
Cost over 5 years
We estimated that this policy would cost the governments approximately £28 million over five years
We commissioned HealthLumen to estimate the cost of the policy to both industry and governments over a five-year period. Table 2 below shows a breakdown of costs. The upfront costs to the governments are estimated at approximately £28 million over five years for monitoring the implementation of the policy and its enforcement. The costs to the food industry are estimated at £2 million one-off cost in the first year. It is estimated that approximately £3.2 billion per year of revenue would be raised. Table 2 below shows a breakdown of costs and raised revenue.
| Group affected | Cost | Horizon | Detail |
| Costs | |||
| Government | £18m | First year | Implementation and familiarisation costs |
| Government | £10m | Ongoing (5 years) | Monitoring costs |
| Industry – Manufacturers | £2m | One-off | Familiarisation costs |
| Revenue raised | |||
| Government | £13bn | Annual (over five years) | Total revenue raised over five years for treasury for tax on sugar |
| Government | £3bn | Annual (over five years) | Total revenue raised over five years for treasury for tax on salt |
Total annual benefit
We estimated that this policy would have an annual benefit of approximately £7 billion
Using analysis conducted by the Tony Blair Institute and Frontier Economics we estimate this policy would result in benefits of approximately £7 billion per year. Approximately two-thirds of this saving would benefit individuals (via quality-adjusted life years, and informal social care). The remaining third relates to savings that benefit the state via NHS treatment costs, productivity and formal social care. See our Methods page for more information about the cost breakdowns.
Impact on disease incidence
We commissioned HealthLumen to report disease incidence avoided if the policy were implemented. These estimates do not represent the total health benefits. The specific diseases selected are those where there is good evidence that living with obesity is associated with the development of the disease.
Table 3 presents a summary of incidence avoided.
| Disease | Incidence avoided |
| Type 2 diabetes | 36,462 |
| Hypertension | 22,280 |
| Coronary heart disease | 9,946 |
| Colorectal cancer | 2,941 |
| Gall bladder disease | 46,547 |
| Ovarian cancer | Not statistically significant |
| Stroke | 5,610 |
| Liver cancer | 453 |
| Depression | Not statistically significant |
| Musculoskeletal disease | 14,390 |
Behind the averages: impact on inequalities
As a tax is levied at the same rate regardless of income, a tax on food or drink may have a disproportionate impact on those individuals in lower-income groups. If salt and sugar costs rise due to the levy, these products may become less affordable for those with limited financial resources. This could exacerbate existing inequalities, as pricing interventions like broader sugar taxes tend to place a greater cost burden on lower socioeconomic groups as a percentage of income.
However, evidence suggests that such taxes can lead to reduced consumption, particularly among lower socioeconomic groups, potentially addressing health inequalities as these groups often have higher rates of diet-related diseases. Research suggests that low-income households could be protected from potential price rises as they are likely to reduce their consumption of taxed foods in response to price increases.
Rating the strength of evidence
We asked experts working in the fields of obesity, food, and health research to rate the strength of the evidence base for each policy, taking into account both reliability (size and consistency) and validity (quality and content) of the evidence. Policies were rated on a Likert scale of 1–5 (none, limited, medium, strong, and very strong evidence base). The Blueprint Expert Advisory Group rated this policy as having a Strong evidence base.
Introduce healthiness targets for large retailers
Regulate large retailers to change their sales-weighted converted NPM score to ≥ 69 across their entire food product portfolio