A sugar tax on soft drinks would barely affect obesity levels in this country, but would be another hit for consumers’ pockets, writes Kevin McPartlan, director of Irish Beverage Council
AS POLITICAL parties struggle to form a government, the possible introduction of a sugar tax has resurfaced. It is hardly surprising; politicians are desperately looking for easy wins, simple solutions to the tricky problems everyone can identify with. Of course easy wins are rarely as they seem.
Those calling on the government to impose additional taxes on sugar-sweetened beverages contend that this will reduce obesity levels and the incidence of type 2 diabetes. But they ignore one critical fact; there is absolutely no evidence whatsoever that this “sugar tax” is effective in either regard.
Consumption of sugar in Ireland, particularly from soft drinks, has been declining for many years while obesity and type 2 diabetes have increased. In any event, only about 3% of all the calories consumed in Ireland come from soft drinks, so any reduction would be of marginal impact.
Some 60% of people in Ireland don’t consume soft drinks at all and yet the level of obesity is absolutely identical in this group as for those who do. To suggest soft drinks are wholly or even significantly to blame for the nation’s weight problem is ridiculous.
Supporters of a sugar tax repeatedly use Mexico as an example of where the measure has been introduced. However, they conveniently fail to mention the fact that, even when the tax appeared to be having some measurable impact and before consumption returned to and exceeded pre-tax levels, it only led to a net reduction per person of 0.2% of the 2,500 calories that an adult man is recommended to consume daily.
Advocates suggest the tax will act as a disincentive to consumers, but don’t mention that sales of soft drinks in France are at the same level after the introduction of the discriminatory levy as before.
Let’s be clear. As a society we need to tackle the increasing levels of obesity and type 2 diabetes; but lazy thinking is no basis for effective public policy.
In recent years, the soft drinks industry has taken thousands of tonnes of sugar and tens of millions of calories out of the national diet by changing recipes and offering consumers a wider choice of products. About half of all non-alcoholic beverages consumed in Ireland are now low and no-calorie drinks.
This was not as a result of legislation or in response to pressure from government; the industry developed and marketed new products as part of their contribution to health and wellbeing. Even “standard” varieties of soft drinks have been reformulated to reduce the levels of sugar.
A report commissioned by Food and Drink Industry Ireland, and launched by the health minister in January, showed that by changing the recipes of existing products and producing and marketing low and no-calorie/sugar products, the industry reduced the amount of sugar contributed by soft drinks to the Irish diet by 10% in just seven years. That equates to 2,500 tonnes of sugar and 10bn calories.
Supporters of an additional tax on soft drinks say that the revenue can be used for public health initiatives, like funding sport in schools, but they also argue that by making consumers pay more for these products they will reduce the quantity sold. Are they seriously proposing we create an unstable funding base for such important initiatives? The truth is consumption will not drop.
A report by the Institute for Economic Affairs showed demand for softs drinks is inelastic, in other words, consumers are prepared to absorb extra cost on soft drinks. Sales do not significantly decrease unless price hikes are dramatic.
In Denmark, when additional taxes were imposed on certain foods, consumers simply switched to cheaper brands of the same type of product, shopped in low-cost retailers, or crossed borders to take advantage of lower prices.
Irish consumers already pay more tax on soft drinks than almost any other Europeans. Unlike some other foods, Vat applies at 23% on all such products.
The bottom line is no one intervention will solve this problem, but there has been credible research to show what measures are likely to be most effective. Global consultancy McKinsey published a major report, Overcoming obesity: An initial economic analysis, just over a year ago. It considered various voluntary and mandatory interventions and ranked them in order of efficacy. Increased taxation isn’t even in the top ten.
And what did McKinsey say would be most effective in reducing obesity? Portion control.
This doesn’t garner the same headlines. It doesn’t fit the populist agenda of accusing someone, anyone, else of being the source of the problem. We prefer to hold others accountable rather than recognise that we need to take responsibility for our own weight and that of our children.
Many politicians and commentators are all too keen to create “baddies” who we can blame for the national weight and type 2 diabetes problem. But no one factor causes obesity, and no one measure will solve it. Some will have no effect whatsoever. A sugar tax will not reduce obesity or type 2 diabetes; consuming less and moving more is the only real solution.
The truth is one can consume standard soft drinks and maintain a healthy weight and lifestyle. It is equally possible to be morbidly obese without ever drinking sugar-sweetened beverages. As with most things in life, moderation is key, but that doesn’t suit those keen to present a simple solution to a complex problem.
We are sleepwalking into more expensive grocery baskets with no public health benefit. And this sets a dangerous precedent. What next after soft drinks? On what other products will they impose further taxes — cupcakes, cheese, steak dinners? And by how much could those taxes increase over the years?
Additional discretionary taxes on particular foods are bad for consumers. They cost money, don’t work, and demonstrate a lack of trust in people to make up their own minds.
It’s time to call out a “sugar tax” for what it is: A simple stealth tax portrayed as a public health initiative.
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