How the 'latte levy' would hit low income coffee drinkers harder

UKHospitality Scotland said the proposed 25p charge on disposable cups would disproportionately impact lower-income consumers, which it claimed would go against the Scottish Government’s commitment to progressive taxation policies.

The organisation pointed out that a 25p charge on a £1.39 hot drink represents an 18 per cent price increase, compared to a seven per cent price increase when the same charge is applied to a £3.50 hot drink. It said this would place a heavier burden on consumers with less disposable income, but who still rely on affordable conveniences.

The comments are in response to a consultation launched by the Scottish Government earlier this year, on proposals for the 25p charge to all single-use cups by the end of 2025.

Leon Thompson, executive director of UKHospitality Scotland, said: “At a time when Scottish consumers are understandably being more discerning with their disposable income, the prospect of a tax on disposable cups is nonsensical.

“The ‘latte levy’ would increase the cost of an affordable drink, like a takeaway coffee, and disproportionately hit lower-income customers. We agree with the Scottish Government’s commitment to progressive taxation policies, but this would be the opposite.”

Mr Thompson pointed to failed attempts to introduce a charge on cups in Portugal, which abandoned plans for a beverage charge due to competition concerns and recognition of paper cups’ recyclability and the Canadian city of Vancouver, which he said repealed a 25 cent disposable cup fee after it failed to change consumer behaviour and adversely affected vulnerable populations.

UKHospitality Scotland said there are a number of initiatives in place to reduce the number of single-use cups being used, through returnable cup and takeback schemes, and urged the Scottish Government to collaborate with the sector on the solutions to continue progress towards net zero.

Mr Thompson said: “There is an overwhelming amount of evidence and international precedent that sets out why this charge doesn’t work, and the Scottish Government should save itself time and money by abandoning these proposals.

“There is already a number of initiatives to reduce the amount of single-use cups being used and they are successful in nudging consumer behaviour in the right direction. I would urge the Scottish Government to focus its efforts on collaborating with businesses to build on this success, rather than introducing an ineffective tax that will only penalise consumers.”

Scottish Government officials have stressed there would be exemptions for specific locations and uses such as in schools and free drinks in hospitals, but there are concerns about the impact on disabled people who can have no choice but to use disposable cups.

Under the plans as they stand, retailers would be able to “retain reasonable implementation costs from the charge” in a similar way to the approach for single-use carrier bags.