Tag Archives: sugar tax

It’s official: soda tax offers “net good” to society

Despite opposition from the soda industry, studies consistently show that sugary drinks need to be taxed.

Want a simple way to improve society? Tax soda, researchers say.

For kids and adults alike, sugary drinks (soda drinks, fizzy drinks — call them as you will) have become nigh ubiquitous — they’re just everywhere. The world loves them and can’t get enough, but there is a cost to all of this. The vast majority of such drinks are essentially devoid of any useful nutrients or fiber and are very rich in sugar, which aside from being notoriously bad for your teeth, is also one of the main culprits of the ongoing global obesity crisis.

In this regard, soda drinks are very similar to alcohol or cigarettes: you don’t drink them because they offer something useful, you drink them as a very small luxury, and an unhealthy one like that. So if cigarettes and alcohol are taxed for these reasons, why shouldn’t sugary drinks be taxed in the same way?

In recent years, economists have been arguing more and more for a soda tax. It makes perfect sense — on the one hand, you reduce the consumption of unhealthy substances, improving society’s quality of life and reducing the burden associated with being overweight, and on the other hand, you raise a lot of money which can be used to develop health programs that add further benefits. A new study analyzed that idea at a fundamental level, and found that a soda tax adds a net benefit in society, if implemented correctly.

“The research is clear that sugary drinks are bad for our health,” explain Hunt Allcott, Wharton’s Benjamin Lockwood, and Dmitry Taubinsky, the papers’ authors. “Our study takes a next step to evaluate the overall economic rationale as to whether we should impose a tax. Using an economic framework, we show that taxing soda generates net benefits to society–taking into account the health effects, the enjoyment that people get from drinking the drinks they enjoy, the value of the tax revenues, and other factors.”

Americans are aware that they drink a lot of soda, the study finds. Just over half of Americans say they drink “more often than I should,” so at least at some level, many people would like to drink less. Previous studies have shown that people with higher nutritional awareness also tend to drink less soda, which suggests that if people were fully informed, they would make better, healthier decisions.

A nationwide soda tax in the US would yield $7 billion in net benefits to society each year, and national (or at least regional) taxes work best. Currently, several cities in the US have implemented such a sugar tax, but the tax impact is limited by the fact that people can simply go outside of town and buy cheaper soda.

Much like the cars emitting pollution that harms others, sugar can cause a wide array of health issues, including diabetes, obesity, and heart disease. This translates into medical bills which are paid by taxpayers or (in some cases in the US) by private insurers. At any rate, having healthier people also translates into reduced costs, but the opposite is also true: unhealthy people will produce a financial cost to society. In this case, researchers estimate that drinking an average 12-ounce can of Coke will impose about 10 cents on others.

These health issues disproportionately affect low-income people, but opponents of a sugar tax have claimed that applying an extra cost will also disproportionately affect this category. This new study finds that this is not the case.

“We estimate that soda taxes benefit both low- and high-income people,” the researchers say. “While low-income people drink more sugary drinks and thus pay more in soda taxes, their health also benefits more from drinking less.”

The study also finds that taxing the actual sugar is more effective than taxing the liquid which contains sugar. A tax of 0.5 cents per gram of sugar would work much better than the 1 cent per ounce of liquid, which is often discussed in practice. This is because, although all sugary drinks are dangerous, some have much more sugar than others, and should be taxed accordingly.

Lastly, the team also discusses diet drinks. The city of Philadelphia, for instance, implemented a sugar tax that also applies to replacements of sugary drinks. While there have been concerns regarding the effects of such drinks on human health, the results are much less clear. Simply put, we’re sure sugary drinks do a lot of damage, and we’re not exactly sure how much damage replacements do. For now, the team recommends taxing sugar.

“Soda taxes should be limited to sugary drinks, where the health evidence is more clear,” the economists conclude.

The study has been published in the Quarterly Journal of Economics and the Journal of Economic Perspectives.

The soda tax works: After tax, Philadelphians are 40 percent less likely to drink soda every day

After a soda tax was introduced in Philadelphia, people started drinking less sugary drinks and more water.

The world is facing an unprecedented obesity crisis and sugar is one of the main culprits. We simply eat too much sugar, and not only in its raw form — there’s plenty of sugar embedded in our foods, and especially in our drinks. The consumption of sugary drinks has increased dramatically in the past few decades, and lawmakers are finally stepping in.

In Philadelphia, for instance, a sugar tax was imposed about a year ago. Now, the effects are becoming clear.

The 1.5 cents-an-ounce tax went into effect Jan. 1, 2017, and raised $72.3 million in its first 11 months. That money went into funding pre-K and community schools, and already, there are more children attending these programs. But these are just the secondary aspects of the tax. Its main purpose was to push people to drink less soda — and that’s working too.

A survey of 900 people from Philadelphia found that 40% less likely to drink sugary soda and 60% less likely to drink an energy drink each day. At the same time, they are 58% more likely to drink more bottled water. Yichen Zhong, a doctoral student at the Dornsife School of Public Health and lead author, comments:

“If distributors fully pass the tax on to customers, it could increase the price of soda and energy drinks by about 20 percent,” said Zhong. “It is expected that a price increase of that magnitude will influence some consumers to stop purchasing non-essential items like sugary soda and possibly switch to a lower-priced beverage, like bottled water — and our results are in line with that.”

Interestingly though, not all sugary beverages dropped — the fruit flavors of Snapple and Sunny Delight, for instance, were not seen to have a decline in consumption, and it’s not yet clear why. It may be that people are willing to pay more for them, or that they mistakenly view them as healthier.

“We were not able to assess whether this was because retailers didn’t raise prices for fruit drinks or whether consumers chose to pay more for those beverages. Those drinks may be viewed as healthier than soda despite having the same amount of added sugar (about 10 packets of sugar per 12-ounces),” said Amy Auchincloss, co-author of the study.

The study is important because essentially, it shows that the sugar tax works. There is a mountain of evidence connecting sugar consumption with obesity and diabetes, as well as heart disease and tooth decay.

“Considering that 30 percent of Philadelphians have at least one sugary beverage each day, any kind of cut in consumption could be impactful,” notes Auchincloss.

Recently, the UK has also introduced a nationwide sugar tax for drinks. I’m curious to see whether effects will be similar there as well.

UK sugar tax starts today — here’s what it means

A groundbreaking sugar tax enters into force as of today in the United Kingdom, which joins a handful of other countries which have already introduced similar taxes.

Image via Wikipedia.

Much more than cavities

Sugar has been linked to a number of health issues. A 2003 World Health Organization (WHO) technical report provided evidence that high intake of sugary drinks (including fruit juice) increased the risk of obesity, and since then, the evidence has piled on. Simply put, eating lots of sugar makes you fat, and if you’re thinking ‘but I don’t really eat that much sugar’ — then think again. Sugar is embedded into a surprisingly large number of processed foods, popping up in most things you’ll find on the shelves. Not least of all, sugar is typically present in large quantities in sugary drinks, and, as a result, sugary drinks are one of the main drivers for obesity in several countries.

Backed by a mountain of scientific evidence, the WHO says that society needs to curb its consumption of sugar to fight the upcoming obesity pandemic — and this is where the sugar tax comes in.

The levy will be applied to manufacturers, and whether they will pass it on consumers or support the tax themselves is up to them. From now on, drinks with a sugar content higher than 5g per 100ml will be taxed 18p ($0.25) per liter, and drinks with 8g or more will be taxed 24p ($0.34). The tax is expected to act on several fronts. Firstly, manufacturers are expected to reduce the sugar content of their products, which many have already started doing (Fanta, Ribena, and Lucozade have cut the sugar content of drinks, but Coca-Cola has not). Secondly, consumers are expected to be somewhat dissuaded by potentially higher prices, and therefore reduce their consumption. Lastly, an expected revenue of £240m ($340) is expected to be raked by the government — that money will be invested in schools sports and breakfast clubs.

However, products such as cakes, biscuits and other foods are not covered by the tax.

Of course, taxes are never popular, and so far reactions have been mixed. Many argue that having a Coke or whatever other sugary drink is a personal choice and shouldn’t be taxed — however, similar taxes have long been applied to alcohol and tobacco (among others) in most parts of the world. Similar taxes have been applied successfully in countries like France, Norway, or Denmark.

It’s important to note that a recent study has shown that the sugar industry was aware of the negative health effects of sugar for decades, but it simply swept them under the rug. Coca-Cola has been under fire since 2015 when emails revealed that funding for scientific studies sought to influence research to be more favorable to soda, and research funded by soda companies is 34 times more likely to find soda has no significant health impacts on obesity or diabetes.

UK pushes forth with sugar tax

The United Kingdom has announced drafts for a sugar tax set to begin in April 2018, addressing the country’s growing obesity problems.

Image via: Public Domain.

The tax is set to work in two different ways: a smaller tax for soft drinks with more than 5-8 grams of sugar per 100ml and a bigger one for drinks with more than 8g per 100ml. However, pure fruit juices, sugary milkshake, and yogurt drinks will be excluded from the tax though authorities stress that people should keep consumption to under 150 ml / day.

The move is supported by researchers, who argue that this is a much-needed step to limit obesity – especially teenage obesity. The move will also combat diabetes and heart diseases. Dr Max Davie, of the Royal College of Paediatrics and Child Health, said:

“We are very pleased to see government moving forward with this draft legislation. The sugary drinks that will be affected by this tax have no nutritional benefit and often contain levels of sugar that are above a child’s daily recommended limit. These drinks are a major contributor to the high sugar intakes of children, particularly teenagers, and we are in no doubt that they are, in part, contributing to this country’s obesity crisis.”

Diabetes is a growing health concern in many developed and developing countries around the world, with 1.5 million deaths directly due to diabetes in 2012 alone. All sugary foods can threaten health, but sugary drinks are particularly dangerous. Unlike sugar from food, the sugar from drinks enters the body quickly, which can overload the liver and pancreas. France was one of the first countries to introduce a targeted sugar tax on soft drinks in 2012, with a similar measure being announced in Mexico in 2013.

Supporters of the tax cite tobacco taxes which are similar in nature and have been wildly successful in most cases. Cancer Research UK estimates a 20% tax on sugary drinks could prevent 3.7 million cases of obesity over the next decade and the World Health organization also backs the tax up, stating that the government could use the tax money to fund subsidies for healthy fruits and vegetables. Worldwide, it’s estimated that sugary drinks alone kill 180,000 adults worldwide.

But of course, the industry negates this. Gavin Partington, of the British Soft Drinks Association, said:

“There is no evidence worldwide that taxes of this sort reduce obesity, and it is ironic that soft drinks are being singled out for tax when we’ve led the way in reducing sugar intake, down over 17% since 2012.”