Taxing sugary drinks gets results

We know that a ‘soda tax’ on sweetened soft drinks works – other countries including Chile, Hungary, France, Latvia, and Berkeley California have already tried it with good results.

Mexico saw a 12 per cent drop in fizzy drinks sales within a year of imposing a sugar tax.

Taxing soda is simple and easy to do and it gets to the heart of the problem: empty calories causing obesity in children and adults. There is a very well documented phenomenon of ‘elasticity’ with pricing sugary drinks and most other things. Basically putting the price of something up 10 per cent will reduce sales by roughly the same amount. It’s 101 health economics.

And the people who are the heaviest consumers of sugar and suffer the greatest health problems, seem to reap the greatest benefits from the tax.

A study which looked at outcomes in Mexico was recently published in the British Medical Journal. That found that after the price hike, people in low-income households reduced fizzy drink intake by even more than the average – by 17 per cent.

That will directly translate into a lower incidence of type 2 diabetes, heart attacks, strokes and common cancers.

It is also wrong to suggest that Denmark’s failure to successfully implement a tax on saturated fat in processed food has any relevance to what the UK government is proposing to do now with a levy just on sugary drinks.

The Danish policy was far more complicated and involved taxation of thousands of diverse food products.

Indeed, the Danish fat tax offered a classic example of ‘how not to do it’. It was run not by the Department of Health, but by the Department of Finance, who implied it was simply a revenue raising measure. There was no detailed preparation, planning or public discussion before it was announced. The Danes failed to anticipate or rebut the spurious arguments from industry, and they failed to get political consensus. So when the government changed a year later, one of the first things that the new ruling party did was cancel the tax.

I also disagree that the sugar tax is somehow a ‘regressive tax’ intended to punish the poor. That suggestion has many flaws.

Firstly, no one bats an eyelid about the ‘regressive’ tobacco or alcohol taxation that might disproportionately hit the poor. That is considered perfectly reasonable.

Secondly, the proposed sugary drinks levy would actually be PROGRESSIVE for health, by achieving a disproportionately bigger reduction in disease burden in lower income families.

Thirdly, many of the people who argue against this “regressive” tax claim that they are concerned for the poor but apparently have financial or other ties with the big food and beverage industries. (Obviously a coincidence, of course).

Finally, the proposed levy on sugary drinks will cost the average person about nine pence per week. That may technically be “regressive”, but it is hardly a major financial blow.

Professor Simon Capewell
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