Rachel Reeves ‘will announce milkshake tax’ in Budget
Rachel Reeves is reportedly expected to introduce a ‘milkshake tax’ in next week’s Budget as she looks to plug the gap in the public finances.
The Chancellor was expected to breach Labour’s manifesto promise by increasing income tax. But The Financial Times reported last week that it had abandoned those plans for fear it could anger voters and Labor MPs.
The chancellor can now be expected to make changes to a number of smaller taxes in a bid to balance the books.
These could include a milkshake tax, The Telegraph has reported, as Ms Reeves is preparing to end the exemption of milk-based drinks from the tax on soft drinks.
Soft Drinks Industry Levy currently applies to soft drinks with added sugar, meaning manufacturers pay at least 18p per liter on soft drinks containing 5g or more of sugar per 100ml.
The tax does not currently apply to milk-based drinks, but Ms Reeves plans to end this exemption and lower the threshold to 4 grams of sugar per 100ml, according to the Telegraph.
Conservative shadow chancellor Mel Stride criticized the reported move, saying: “If these reports are true, Labour’s new milkshake tax moves the goalposts once again for an industry that is already cutting sugar and making the changes responsibly.
“We will see businesses that play by the rules being punished and products suddenly being dragged into the tax net – all to save Rachel Reeves.”
The Independent has approached the Treasury for comment. A spokesman declined to comment on Budget speculation.
This comes as speculation regarding the upcoming budget increases. Rumors are partly to blame for weaker-than-expected economic growth figures, according to the former chief economist of the Bank of England.
Andy Haldane, the bank’s chief economist until 2021, told Sky News’ Mornings With Ridge And Frost that the budget buildup was a “circus” and called for an overhaul of the process to prevent leaks that could damage the economy.
This follows official figures last week which revealed economic growth slowed to 0.1 per cent in the third quarter from 0.3 per cent in the previous three months, worse than most economists had predicted.
Ms Reeves blamed the poor performance of Jaguar Land Rover’s production halt following the cyber attack; Gross domestic product (GDP) fell by 0.1 percent in September after this attack affected activity in the manufacturing sector.
But Mr Haldane said the Budget rumors had “no doubt” had a direct impact on growth.
He told Sky News the upcoming Budget was “a real circus that’s been in town for months”.
He said: “It caused businesses and consumers to pull back.
“One of the reasons why we had a very weak growth figure last week was that Budget speculation reduced people’s willingness to spend.
“And above all, we need to stop these speculations.”
