Chancellor Rachel Reeves is set to remove the tax-based exemption for milk drinks (Image: Getty)
Milkshake companies are urging the Chancellor to look at the “nutritional benefits of milk” before “demonising” it as Rachel Reeves is set to remove the milk-based tax exemption. Manufacturers are urging the Treasury to only apply the new rule to added sugars ahead of the Budget next week. Under the Soft Drinks Industry Levy, Ms Reeves is expected to scrap the relief that milk drinks receive.
While the details remain unclear, the Chancellor is being urged to only apply the tax to “added sugar” and not sugars which occur naturally, such as lactose. Shaken Udder CEO Rob Reames said: “The government is overlooking the nutritional benefits that milk naturally provides. If the government has listened, the proposed sugar tax on milkshakes should go ahead with a lactose exemption, otherwise ministers risk pushing consumers towards less beneficial alternatives, undoing the health benefits that the levy aims to achieve.”
More details of the ‘milkshake’ tax will be announced at the budget (Image: Getty)
He told The Grocer: “Our call to the government is to only place a levy on any added sugar elements of a dairy drink, to prevent demonising milk.”
The Treasury has reportedly proposed a metric for “calculating the lactose allowance for a milk-based drink”, which it said was 4.8g lactose per 100ml of milk.
Under the current system, soft drink manufacturers are required to charge at least 18p per litre on soft drinks containing more than 5g of sugar per 100ml.
If the exemption is scrapped, Mr Reames said brands may have to reformulate their recipes to avoid the levy. He said this would mainly impact small and medium sized businesses “who don’t have the same budgets as larger businesses”.
He said: “Reformulation may also come at the expense of taste, change the product as people know it, and force producers to find less natural solutions to sugar.”
The CEO added that his company will not be reformulating their products with artificial sweeteners in order to navigate the sugar tax.
During a consultation period earlier this year for the Soft Drinks Industry Levy, former exchequer secretary to the Treasury James Murrary and parliamentary under-secretary of state for public health Ashley Dalton said the extension to milk-based drinks is necessary.
“While there is no doubt about the nutritional benefits of plain milk, it remains an anomaly that sugary pre-packaged milkshakes and other milk-based drinks are exempt from the levy,” they said.
