The sugar tax was one of the most talked about proposals unveiled in the recent budget. The levy, which is due to come into effect in April 2018, is intended to reduce childhood obesity. But will it? I’m not too convinced.
In adopting this tax, the UK will follow the lead taken by a number of European countries, Mexico, Australia and numerous American states which have taken steps to improving public health by imposing an extra levy on unhealthy foods and drinks. A Public Health England (PHE) report titled Sugar Reduction: From Evidence to Action found that in countries where price increases on higher-sugar products, as a result of “sugar taxes”, led to a decline in sales proportionate to the tax rate. Mexico’s imposition of a 10 percent tax on products with higher quantities of sugar led to a reported 6 percent reduction in sales, including a 9 percent reduction in lower socio-economic households.
Although PHE observe “some indications” of small decreases in sales of between 4 – 10 percent, their report concludes that there is no “robust” evidence available that demonstrates that taxes have an effect on consumption and on public health in general.
Even if the British sugar tax can reduce sugary drink purchases, PHE findings suggest that it is doubtful whether price increases will encourage significant numbers of sweet-toothed customers to alter their consumption habits. Soft drinks, (including energy drinks) are already taxed at the standard rate of VAT (20 percent) along with sweets and chocolates; however this sizeable levy does not appear to have affected how people shop. Of course, the response offered by some people will be that a further levy is necessary to make a substantial difference. But will it? Will shoppers be put off by proposed price increases on high-sugar drinks?
Under the sugar tax plan, drinks with 5-8g of sugar per 100ml (i.e. Powerade, Tango Orange and Lilt) will be taxed at 18p per litre. Drinks with over 8g of sugar per 100ml (Coca-Cola, Pepsi and Red Bull) will be 24p more expensive for every litre. This will mean that the price of a standard, 330 ml can of Coca-Cola will increase from 68p to 76p and a can of Red Bull will go from £1.99 to £2.07. Will that 8p make a lot of difference to school-age children? Will that extra 48p make a parent think twice before purchasing a 2l bottle of Coke when carrying out a weekly shop?
Fizzy drink consumers might instead opt for cheaper supermarket brands, which, while still hit by the sugar tax, will still be cheaper than premium brands. Others might instead switch to other unhealthy foods such as cakes, sweets or chocolates and other items which will not be affected by the sugar tax.
Moreover, drinks companies, concerned about the impact the tax may have on sales, might look to reduce, or eliminate, sugar quantities in their products while increasing levels of artificial sweeteners like those found in “Diet” and “Zero” soft drinks. Companies will have a two-year period to consider their options before the levy comes into effect in 2018.
The government claims that the sugar tax will reduce childhood ability, but surely the elephant in the room is the level of inactivity. Schools should do more to ensure that pupils do more exercise, even if that simply involves a 15 minute daily run around a sports field or playground at the start of the school day. These sorts of schemes would be easy to organise and would boost fitness levels. Government can play a part in supporting such initiatives in addition to promoting healthy lifestyles and by raising awareness about unhealthy life choices.
It is good news that the government is taking the matter of children’s health seriously, promising to use tax receipts to fund school sports in England, even if the sugar tax is not the sweetest deal it could have chosen to implement this initiative.