As part of his budget, the MP told members of the public that money raised through more expensive fizzy drinks will be spent on primary school sports.
He estimates the amount to be in the region of £520 million and will provide a 'long-term plan for our children's health care'.
The Chancellor added, 'Doing the right thing for the next generation is what this government and this Budget is about, no matter how difficult and how controversial it is.
'I am not prepared to look back at my time here in this Parliament, doing this job and say to my children's generation - I'm sorry, we knew there was a problem with sugary drinks and we knew it caused disease but we dumped the difficult decisions and did nothing.'
Celebrity chef Jamie Oliver has already commented, saying the new sugar tax is 'amazing news' after campaigning for the changes to be brought into place.
What will the sugar tax mean for me?
Gin drinkers, look away now. The new sugar tax, set to be actioned in two years time, will make one of our favourite tipples more expensive. Gin and tonic will be hit when the new laws come into play, as an average bottle of tonic water contains more than 5g of sugar per 100ml - which is the new measure of which drinks should and should not be taxed. There is some good news however, slimline tonic won't be taxed as it doesn't contain sugar.
It's thought that with the two-year time frame many companies will try and change their recipes to keep their drinks under the tax bands where possible.
There will be two bands of taxation. Sugary drinks with a content of more than 8g of sugar per 100ml will be taxed more, while drinks that contain more than 5g of sugar per 100ml, like tonic water, will have a slightly lower level of tax.
Popular favourites like Coca-Cola, which Mr Osborne noted in his speech contains nine teaspoons of sugar per serving, will be hit the hardest, with prices for a can going up about 5p. It is thought that on average this sugar tax will mean drinks with added sugar will cost around 18-24p more per litre than they do currently.
Milk-based drinks and fruit juices are exempt, so you'll still be able to enjoy your frappuccino without any extra cash needed!
It was only two months ago that Simon Capewell, professor of clinical epidemiology at the University of Liverpool, slammed sugar and the dangers of having too much of it in our diets by labelling it the 'new tobacco'.
In January, campaign group Action on Sugar was established to work on reducing the amount of sugar added to food and soft drinks and educate the public about 'hidden sugars'.
We don't know about you, but up until sugar was everywhere in the news and we were being told just how bad it is for us and just how much of it is (unknowingly at times) lurking in our everyday foods, we always deemed calories and fat content as the real worries when it came to our diet.
It's all so easy to ignore those scare-mongering stories in the media about how bad this food is for you and how this drink can cause this disease, but when it comes to the facts about something like sugar, it's hard to turn a blind eye:
- The typical Briton consumes 12 teaspoons of sugar a day and some adults consume as many as 46 (the maximum intake recommended by the World Health Organisation is 10 - a guideline likely to be halved)
- Sugar is to blame for an ever-growing number of obesity and diabetes cases in the UK (a burden of £5 billion a year)
- As well as obesity and diabetes, too much sugar can also lead to fatty liver, cancer and tooth decay
- Sugar is thought by scientists to be highly addictive
- Sugar is also incredibly difficult not only to avoid but even detect, and those of us that think we're reading food labels properly could be missing the sugar content when hidden behind as many as 50 different names for the stuff. To make matters worse, it's hiding in the most unsuspecting foods (after all, zero-fat yogurts containing five teaspoons of sugar hardly seems fair, does it?)
With so many people not only unable to detect the sugar they're putting in their own bodies but in the foods they're feeding their kids too, a sugar tax seemed like the only option.
Campaign group Action on Sugar tried, and failed, to encourage manufacturers to reduce the amount of sugar they add to products by 20 to 30 per cent within three to five years, taking 100 calories a day out of the typical diet. Professor Dame Sally Davies, Chief Medical Officer for England, has previously called for the sugar tax, claiming the Governments' new policy will protect people against excess calorie intake.
Speaking in an interview previously she said, 'We haven't managed to get over to the public how calorie packed fruit juices are, smoothies are, colas and carbonated drinks are.'
She remarked that normalising being overweight, a rise in childhood obesity (she suggests our children may be the first generation to die younger), and that just promoting physical education alone would not improve the crisis.