Issue 26 / 11 July 2016

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.

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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5 thoughts on “2016: the year of the sugar tax

  1. Pamela Gilbert says:

    yes- a high tax on sugar is warranted as a pubic health issue!! or remove it from processed food altogether

  2. Dr Rosemary Stanton says:

    Taxing sugary drinks is low hanging fruit and ripe for the picking. No one pretends that a tax increase on its own will solve all problems, but it’s an important part of the mix in decreasing consumption. And do we need more proof that it would decrease consumption than the objection from the processed food industry? They know that a price rise affects consumption.

    Comment to Enamid – there’s plenty of hard evidence showing that when the price of cigarettes or beer increases, consumption does fall.

  3. Stan Doumani says:

    Seems to me that introducing a tax on sugary drinks is going to make not one iota of difference to consumption of these drinks but a substantial difference in the Governments bottom line in terms of their taxation income. Now, if the moneys raised were guaranteed to be extra dollars into the health budget then this tax might be of benefit. But, that won’t happen either. If history teaches us anything it is that addictions such as alcohol, ciggarettes and sugary drinks are not impacted any any substantive sense by increases in price unless they are enormous increases and even then the effect is minimal.

    Plain packaging has seemed to have the biggest impact on ciggarettes. Now there’s a thought! Imagine no Coca~Cola brand or V brand or any other brand being allowed to be displayed, only pictures of decaying teeth and the like. Good luck with that idea! Buckley’s and none I would say….

  4. michiko parnell says:

    I’m all for a tax on sugary drinks, but I want that tax used to subsidize good quality foods to boost their consumption. Does that sound fair? After all poor people are the ones we want discouraged from cheap sugary drinks right? Poor people who can’t afford foods like fruit, fish and nuts, which we know are beneficial? Or is that too hard.

  5. Keith McArthur says:

    This needs to happen. How can I support the introduction of a sugar tax?

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