2016: the year of the sugar tax

IT could be said that 2016 is the year of the sugary drinks tax.

January saw the release of the first ever national sugary drinks tax evaluation in Mexico. Twelve months after introducing a 1 peso per litre tax (roughly equivalent to 10%) on sugary drinks the purchase of these drinks declined by 12%.

In February, South Africa joined the crusade against sugary drinks, announcing in the federal budget a tax on sugary drinks to be implemented on 1 April 2017.

The UK followed in March with the announcement of a two-tiered levy on sugary drinks, to be implemented in April 2018 and imposed at the point of production or importation. Product reformulation to lower sugar contents are expected. Revenue raised will be used to support sport programs in primary schools.

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In June, Philadelphia became the first major US city to triumph above the heavily invested soft drink industry to give preliminary approval to a 1.5 cent-per-ounce tax on sugary and diet beverages. Tax revenue has been earmarked for pre-kindergarten, community schools and recreation centres.

In the same month the Australian Greens threw a 20% sugary drinks tax into our national political debate.

While the beginnings of an international groundswell for taxing sugary drinks to improve population health may be forming, opponents of the tax are quick to lament that low-income earners would be hit the hardest. Their concern is that low income earners, who generally consume greater quantities of sugary drinks, would pay a greater proportion of their income in additional tax.

Our recent research, which reviewed the international evidence on how a sugary drinks tax would affect different income groups, indeed showed that lower income groups will pay a greater proportion of their income on a tax. However, this difference is modest.

Our review found that, on average, the annual tax burden for all households, regardless of income, was estimated at less than $25 per year (0.03–1.0% of annual household income). Differences between high and low income households were estimated at less than $10 per year.

Weight benefits on the other hand were consistently shown to be similar or greater for lower, compared to higher, income households. The recent results of the Mexico sugary drinks tax evaluation support these conclusions, with greatest declines in the purchase of sugary drinks among lower income households.

Incentivised industry reformulation to lower the sugar content within drinks is likely to further enhance health equity impacts, owing to the higher consumption of sugary drinks with increasing socio-economic disadvantage.

Reinvestment of tax revenue to preventive health programs targeted to more disadvantaged groups or population health policies developed with an equity lens would again enhance overall health equity effects. 

Dismissing a sugary drinks tax on the basis of relatively modest differences in the financial tax burden between income groups inappropriately ignores the unacceptable differences in health between those with greater and lesser social and economic resources. It ignores the fact that at a time when the prevalence of obesity prevalence is levelling off among higher socio-economic groups, it continues to increase for more disadvantaged children.

A tax on sugary drinks represents a promising policy that should be considered within a suite of interventions to address population excess weight. As a prevention measure with large population benefits, a positive impact on health inequalities and a potential to raise revenue for government, a sugary drinks tax looks like a win-win-win for Australia.

So let’s steam ahead, join the groundswell and make 2017 even more eventful in the policy sphere of sugary drinks taxes.

Kathryn Backholer is a National Heart Foundation Senior Research Fellow in the Obesity and Population Health Unit. Anna Peeters is a Professor of Epidemiology and Equity in Public Health at Deakin University and Head of the Obesity and Population and Health Unit at the Baker IDI Heart and Diabetes Institute. Both are members of the Global Obesity Centre, a World Health Organization Collaborating Centre on obesity prevention, at Deakin University.

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