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Will soft drink companies sue the UK government over the sugar tax?

Soft drinks companies frustrated at the U.K. government's decision to impose a tax on the sugar in beverages are considering legal action, the industry body told CNBC.

Last week, U.K. finance minister George Osborne announced plans for a soft drinks levy in his budget speech. The tax, which will be introduced in 2018, will be paid by producers and charged on products containing more than 5 grams of sugar per 100ml, with a higher rate of tax for products containing more than 8 grams.

Osborne said in his speech that he expects the levy to raise £520 million ($749 million) in its first year. The soft drinks market in the U.K. is worth £15.7 billion, according to the British Soft Drinks Association (BSDA).

Britain's Chancellor of the Exchequer George Osborne tours the Britvic manufacturing plant near Leeds in northern England April 1, 2015.
Leon Neal/pool | Reuters
Britain's Chancellor of the Exchequer George Osborne tours the Britvic manufacturing plant near Leeds in northern England April 1, 2015.

CNBC asked Gavin Partington, director general of the BSDA, whether the association's members were considering legal action against the government in response to the levy.

"At this stage all options are on the table," Partington told CNBC via email. "We need clarification about how this tax is going to work, exactly what's excluded and what's not. Nothing can be ruled out at this stage."

After the levy was announced, the BSDA said in a press release it was "extremely disappointed" by Osborne's decision.

Similarly, neither soft drink producers Coca-Cola GB or A.G. Barr denied the possibility of a legal action.

"It is extremely disappointing that soft drinks have been singled out given it is the only food and drink category to have made any real progress in reducing sugar intake in recent years, down 13.6 percent since 2012," A.G. Barr said in a statement.

"We need to know more about the levy and how the Government plans to implement it," a spokesperson for Coca-Cola GB told CNBC via email.

"Once this is clear to us, we'll decide on what steps to take as a business and how best to continue the work we have done to help people consume less sugar."

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