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A sugar tax is needed to kickstart companies into action – not consumers

Time for a tax? Bychykhin Olexandr /

Celebrity chef Jamie Oliver’s campaign to introduce a sugar tax on fizzy drinks and snacks has been gaining momentum. Oliver has a history of trying to persuade the British public to eat more healthily, with mixed results – his campaign for healthier school dinners led to some parents feeding their children chips through the school railings. And his current crusade has suffered the usual backlash of people decrying both that you have to be a celebrity to get yourself heard and that this is just another “nanny state” move.

We know from previous attempts to put punitive taxes on foods that there can be unintended consequences. In 2011, for example, Denmark introduced a fat tax: food containing more than 2.3% of saturated fat was subject to a surcharge, including dairy produce, meat and processed foods. It was abolished within a year.

The reasons for the withdrawal of the tax included the overall inflation in food prices, job losses that resulted from the impact of taxes on businesses producing and selling high fat foods, and people circumventing the tax by buying cheaper fatty foods across the border in Germany. Small specialist retailers such as butchers and delicatessens were particularly hard hit as their stock was primarily high-fat foods.

The easy option

Taxing people on what they eat will always be problematic. Food is not the same as tobacco or alcohol. While we can live without smoking or drinking alcohol, we cannot live without food. Plus we are predisposed toward eating the sugary and fatty foods that lead to obesity and its associated diseases. The problem with food is that it’s more an issue of the amount and type we eat.

One area where a sugar tax could easily be introduced, with positive effect, is on sugary drinks. They form part of multibillion dollar industry. In 2013, the US soft drink market was valued at about US$98 billion, up from US$92 billion in 2010. Meanwhile, studies have consistently shown that the health impact includes, increased energy intake and concomitant weight gain, diabetes, tooth decay and a lower intake of milk, calcium and other nutrients.

Companies have already shown that it’s possible to reduce the amount of sugar in their drinks. Mike Mozart, CC BY

Most sugary drinks are produced by large multinational firms that are unlikely to go out of business if a small country like Britain introduces a levy of this kind and the effects on business do not have to be entirely punitive in the long term. Perhaps it is time to see the positive side of this so-called nanny state imposition.

Governments are typically fond of promoting self-regulation and engaging with business for a better outcome. The current government has the Responsibility Deal which includes a number of pledges from companies to improve the health of the British public, including reducing calorie and salt content. Nevertheless it has received a lot of bad press for its limited role, and the power of the companies involved. This in turn has led to many public health organisations leaving the deal and criticisms as to what it has achieved.

Give it a go

It currently appears that the government will ignore Oliver despite his celebrity status. Indeed, a previous opportunity for introducing a tax on consumption of problematic substances was turned down by the government when it backtracked on setting minimum prices for alcohol. At that time I suggested that given evidence from Canada on the success of minimum alcohol pricing it was worth just giving it a try. Nanny state or not, I think the same should be said of Jamie’s sugar tax. It is worth giving it a go, given the evident problems this country has with obesity and its associated health issues.

In the first instance I would limit it to fizzy drinks to see, not what the consumers do, but how producers respond. We have already seen that drinks manufacturers are perfectly capable of developing fizzy drinks that have lower calories. In most soft drinks the calorie intake is from sugar whether naturally occurring from fruit or added for taste and in colas the calorie content is entirely made up from the added sugar. With the recent introduction of its Coca-Cola Life product, Coke shows that it is possible to have a range of options:

  • Coca-Cola = 42 calories per 100ml.
  • Coca-Cola Life = 27 calories per 100ml.
  • Coca-Cola Zero = Less than one calorie per 100ml.
  • Diet Coke = Less than one calorie per 100ml.

If there was a sugar tax, this might encourage Coca Cola and other companies producing sugary drinks to limit their product range to just those products with lower sugar content and indeed spend money on formulating new low sugar drinks. That is what a sugar tax could do – actually kick start companies into researching, producing and marketing drinks with less sugar.

While it will always be healthier to be drinking water, the sugar tax might just put the responsibility back in the court of the producer rather than the consumer.

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