A SUGAR tax on soft drinks could result in thousands of job losses, a report suggests.

The study, by Oxford Economics on behalf of the British Soft Drinks Association, said the levy could lead to 4,000 job losses, with the hospitality industry and smaller retailers hit hardest.

The proposed sugar tax on drinks such as Coca-Cola, Pepsi and Red Bull will come into force from 2018.

Drinks with 5g of sugar per 100ml will face a lower rate of tax while those with more than 8g per 100ml will face a higher rate, under plans unveiled by then chancellor George Osborne as part of the Budget in March.

But retail groups and a number of businesses have joined a campaign against the tax.

Gavin Partington, director- general of the British Soft Drinks Association, which is providing funding for the campaign, said: “We agree with the Government obesity levels are too high and action is needed, but burdening businesses and consumers with an ineffective tax is not the answer.

“We know from the evidence around the world where they have tried a tax that it will not make a difference to obesity.

“What it will do, as this report shows, is damage thousands of businesses across the entire soft drinks supply chain, from farmers to manufacturers, to convenience stores and the pub and restaurant trade.

“The Government needs to be supporting these businesses and working with industry to support actions that are already making a difference, such as reformulation, smaller packs, and more marketing of the many no-sugar options now available.”

A Treasury spokesman said: “The levy is about getting producers to use healthier ingredients to reduce levels of added sugar in products children consume.

“If they reformulate, they will not have to pay.

“Companies have two years, before the levy comes into force, to adapt, and it’s designed to encourage them to reformulate their products so there is less added sugar in soft drinks.

“Already Britvic has said it will reduce calories in their drinks by 20 per cent over the next four years in response to the levy.

“British children are currently consuming three times the recommended amount of sugar and health experts agree there is a specific problem with sugar-laden soft drinks.”

Earlier this month, Irn-Bru manufacturer AG Barr said it anticipated a dip in first-half sales in the face of “challenging market conditions”.