Sweet Spot for a Sugar Tax?

This year could be ‘year of the sugar tax’ as countries consider higher levies on sugary foods and beverages to combat obesity.

February 09, 2016

LONDON – Reuters is reporting that 2016 could be the year of the sugar tax, “as several large nations consider levies on sweetened food and drinks to battle obesity and fatten government coffers.”

Supporters say a sugar tax will result in higher prices on certain beverages and foods, making them less appealing to consumers. Opponents, however, maintain that such taxes unfairly target certain products, result in job losses and hurt the poor—but these reasons haven’t stopped Scandinavian countries from levying such taxes, as well as France, Hungary and Mexico, notes the news source.

India, the Philippines and Indonesia are considering similar levies, notes Reuters, while Britain debated the issue late last year. "While we understand that there are discussions occurring in those countries, the bottom line is that taxes do not improve public health in any country,” International Council of Beverage Associations Executive Director Kate Loatman told the news source. 

India is facing a potential sugar tax increase by as much as 40%, notes Reuters, as part of a broader fiscal overhaul. Coca-Cola India has warned that the proposal would lead the company to “consider shutting down” certain factories and plants, as well as a "sharp decline" in sales. In the Philippines, a 22-cent-per-liter soda tax “would certainly upset a high-potential market,” according to analysts.

Mexico’s sugar tax, implemented in January 2014, covers sugar-sweetened foods and drinks and is intended to reduce obesity. Reuters reports that in the first year of the tax, consumers did purchase about 6% fewer soft drinks per month, reaching about 12% per month by December 2014.

While health officials call Mexico’s sugar tax a success, the impact on public health is debatable. Tom Sanders, a professor of nutrition and dietetics at King's College London, told the news source that the level of consumption decline experienced after Mexico’s tax took effect is roughly equivalent to a person consuming about one sugar cube less per day, or “a drop in the caloric ocean.”

Advertisement
Advertisement
Advertisement