Bloomberg View: Sweet and sour notes on ‘sugar tax’

The notes are as sour as they are sweet when it comes to a sugar tax to beat the obesity epidemic. South Africa will be instituting its own tax on soft drinks in 2017, but just how effective is this likely to be? In the UK last week, Chancellor of the Exchequer George Osborne announced the UK version to be implemented in 2018. Critics, among them the FT’s ‘undercover economist’ Tim Harford, point out the absurdity of calling it a sugar tax when it is aimed only at soft drinks. Harford says it ‘seems strange to take the view that sugar in general poses no risk to the nation’s teeth or waistline, unless it comes in a soft drink’. I’d put it a whole lot stronger than that. Still, as Andrea Teagle writes in the Daily Maverick, there is research to suggest that a single intervention can have a massive effect. It’s better than nothing, and obesity has multiple causes, as this Bloomberg post points out. It is one way of putting a lid on Coca Cola’s ongoing attempts to ‘healthwash’ its products. – Marika Sboros

A sugar tax on soft drinks – what will it achieve?

(Bloomberg View) – Britain, the most obesity-plagued country in Western Europe, has suddenly wised up to one smart solution: a soda tax.

Starting in 2018, the chancellor of the exchequer announced last week that the UK will impose a levy on the total sugar content of drinks – a measure the government had long opposed.

This gives beverage makers ample time to change their recipes and otherwise prepare. And that’s fine; the tax is not meant to hammer business but to change consumer behavior by reminding people that consuming too much sugar is dangerous. That’s principally because it can cause obesity and Type 2 diabetes.

This message is especially urgent in the U.K., where the incidence of obesity has tripled in the past 30 years. Public Health England estimates that nearly a quarter of adults and 19 percent of 10- and 11-year-olds are now obese. Obesity and its related ills – including cardiovascular disease – cost the U.K.’s National Health Service roughly £5.1 billion ($7.1 billion) a year.

Raising the price of very sugary products can discourage people from buying them, as Mexico has demonstrated. Its soda tax, imposed last year, has already led to a 12 percent decline in consumption, with particularly marked decreases among the poor.

Other countries have put a price on sugar for longer. France introduced a tax on all beverages with added sugar or artificial sweeteners in 2012, while Finland and Hungary have had broader taxes on sugary products since 2011. The European Commission has said these taxes seem to lower consumption, but further research is needed to learn what products people may be buying instead.

No one expects sugar taxes to be a cure-all. Obesity has multiple causes, after all. But if Britain’s new tax can both lower consumption of sugary drinks and encourage other governments to follow suit, it will bring a sweet improvement in public health.

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