German Food Minister Schmidt says no to UK Sugar Tax

German Food Minister Schmidt says no to UK Sugar Tax

According to an article from Die Welt the Federal Minister of Food, Christian Schmidt (CSU) rejects a tax on sugary drinks on the model of the one announced by the British Government on March 16 2016. The Ministry spokesperson reminded that previous tax attempts in the EU did not achieved the desired results, instead they have been very costly to implement and manage.

Detlef Groß, president of the German association for the non-alcoholic beverages, recognizes that «obesity is a complex phenomenon», one that cannot be stopped by a one-sided discriminatory tax on a single product category. Mr. Groß also reminded that soft drinks accounted for only a small part of the daily caloric intake as the the sector offers consumers a wide range of options, both with and without sugar.

The Ministry seems is on the same page as it states that taking action on soft drinks alone would be irrelevant; instead it envisions a holistic approach, stressing that people has to be convinced to pursue a healthy lifestyle, rather than forcing them to change their habits through legal constraints. According to the Ministry the key to healthy practices is in the school system which should educate and inform the population since childhood in order to foster “nutritional competence”. At the same time the Federal Government created a €2 millions research fund to study the reduction of salt, sugar and fat in processed food.

Please find the original article on Die Welt website.

Mixed reactions to new study on Mexican sugar tax

Mixed reactions to new study on Mexican sugar tax

A new study on the effects of the Mexican tax on sugar sweetened beverages published in the medical journal ‘The BMJ’ has triggered different reactions among experts, after finding  a 6% drop in sales, while an increase in consumption of bottled water and other non-taxed drinks.

A research team from Mexico’s Instituto Nacional de Salud Pública, a federal health agency, and the University of North Carolina at Chapel Hill compared sales data before and after the implementation of the tax, looking at purchasing patterns in more than 6,000 households across 53 large Mexican cities. They found that on average in 2014 the sales of sugary beverages fell by 6%. The decline was particularly high among low income households, whose consumption had fallen 17%, confirming the discriminatory effect of such a tax.

Some observers looked at these findings as the proof that taxation can influence consumers’ behaviour, while others are more cautious, questioning whether such a measure is appropriate and warning of its multiple and complicated side effects. The study itself concludes that at the moment it cannot be foreseen “whether the trend continues or stabilizes” and if “consumers substitute cheaper brands or untaxed foods and beverages for the taxed ones, or adjustments occur in the longer term”.

Franco Sassi from OECD, in an editorial published on ‘The BMJ’ together with the study, underlined that taxes do not necessarily lead to healthier diets and the “full extent of substitutions made by Mexican consumers is not known”. Mr. Sassi also added that “taxes are not simple tools, and designing them to engineer an improvement in people’s diets is especially complex”. The approach to a problem like the one of obesity should be comprehensive, much broader than just taxation: education, voluntary initiatives by the industry and regulatory measures (e.g. labelling) are some examples.

“Taxes (…) cannot be viewed as a magic bullet in the fight against obesity” – he concluded.

Dutch experts question sugar tax effects on health

Dutch experts question sugar tax effects on health

When asked to comment on Jamie Oliver’s controversial ‘sugar tax’, Dutch experts expressed their doubts regarding the efficacy of such measure when it comes to improving public health.

A tax on sugar barely makes sense because consumption may decrease only if prices substantially increase, according to Astrid Postma-Smeets, nutrition and health expert at the Voedingscentrum (Dutch Nutrition Centre). The Nutrition Center is the authority that provides consumers with independent and science-based information on healthy, safe and more sustainable food choices. Instead of campaigning for a ‘sugar-tax’, the Centre is convinced that the best approach to obesity is prevention and education.

Also Jos Look, board member of the Dutch Obesity Society, has his doubts on taxation, especially on soft drinks: “Almost 51 percent of the Dutch population is overweight and more than a third of them is severely overweight. And that is certainly not only because of a Coke. You can find added sugars in everything: even in packaged fresh fruit salad”.

 

The original article published in De Telegraaf can be found here.

Australian Beverages Council replies to calls for ‘soda tax’ providing evidence on its ineffectiveness and unfairness

Australian Beverages Council replies to calls for ‘soda tax’ providing evidence on its ineffectiveness and unfairness

Like many other countries, Australia is looking for the best solution to tackle the growing problem of obesity. As many are asking for a tax on certain products, including soft drinks, the Australian Beverages Council shows why a measure of this type will not work.

First of all, recent studies have identified what has been called “Australian Paradox” – the fact that in the last years, while the refined sugar intake has dramatically decreased (26%), as well as the consumption of sweetened beverages, the prevalence of obesity in Australians was multiplied by 3. Moreover, according to a 2012 Australian Health Survey conducted by the Commonwealth Scientific and Industrial Research Organization (CSIRO), soft drinks represent just 1.7% of the average adult’s daily calorie intake. This figure shows that a tax on soft drinks would not have much effects.

In addition, similar taxes in other countries have failed: the Danish ‘fat tax’ was abolished 18 months after its introduction due to its ineffectiveness and negative impact on the economy. In 2014 also the European Commission conducted a study on the impact of food taxes, concluding that instead of increasing citizens’ health these measures provoked job losses, higher food prices and higher administrative costs.

The introduction of a soft drinks tax in Mexico has raised another fundamental concern: the 63,7% of it is collected from low income families, according to KantarWorldpanel. This illustrates how such taxes are regressive and damage the most the least well-off families.

Two more facts have to be taken into account: consumers are choosing more and more no or low calorie products and, according to a 2014 Australian survey, they strongly believe that education is the most effective way to tackle obesity.

The full statement by the Australian Beverages Council can be found here: ABC White Paper.

New report shows Berkeley Soda Tax is poorly transmitted to consumer prices

In January 2015, the city of Berkeley (United States, California) introduced a tax on sugar-sweetened beverages at a rate of one-cent-per-ounce with the clear objective of lowering consumption of thetargeted products. In a report issued in August 2015, economists John Cawley and David Frisvold show that “there was relatively little pass through of the Berkeley SSB tax to consumers”.

A key reason is that retailers cover the cost of the tax in order not to drive consumers towards stores located outside of Berkeley. As a consequence, the tax is only levied on businesses and shops and are not uniformly transmitted to the consumer price. The authors estimate that “across brands and sizes, we estimate that retail prices rose by less than half of the amount of the tax”, meaning that at least 50% of the tax becomes exclusively a new burden for small businesses and that the tax “will result in less of a reduction in consumption, and thus less health improvement, than anticipated”.

Those conclusions are echoed by the ones from the study on the impact of food taxes on competitiveness in the agri-food sector commissioned by DG GROW (European Commission) in 2014, which concluded that “there is no clear and uniform transmission of taxes to consumer prices due to strategic pricing behaviour by manufacturers and retailers” (p. 24)  and that “an ad valorem tax and situation of high ex ante margins will likely result in undershifting with firms bearing part of the tax through reduction of margins” (p. 33). As a conclusion, a tax on sugar-sweetened beverages would not only be inefficient in fulfilling its objectives of lowering consumption but will effectively hurt businesses and competitiveness.

WHO Europe paper on pricing policies to promote healthier diets miss

WHO Europe paper on pricing policies to promote healthier diets miss

On 23 March 2015, WHO Europe released a paper called “Using price policies to promote healthier diets“.

Although the paper acknowledges that broader effects of HFSS taxes, such as product substitution, the impact on health inequalities and on overall diet, should be very carefully taken in consideration for designing a tax, it largely supports fiscal measures and concludes that taxes can be effective. The saturated fat tax in Denmark, the sweets tax in Finland and the product health tax in Hungary and the tax on sugar and non sugar-sweetened beverages in France are among the examples reviewed and are described to have provoked reductions in consumption, among other positive effects.

However, WHO Europe has not included the latest findings of the study ‘Food taxes and their impact on competitiveness in the agri-food sector’, commissioned by the European Commission. It found that food taxes in general achieve a reduction in the consumption of the taxed products and as a result, consumers may instead purchase similar non-taxed or less heavily taxed items. It also shows that consumers may simply buy cheaper brands of the taxed products, thus potentially not lowering their consumption of the ingredient the tax aims to target (i.e. salt, sugar or fat). Equally, consumers may be able to buy other products with similar levels of sugar, salt or fat to those that are taxed. The full European Commission study can be downloaded here.

Taxing food and drink is regressive and places stress on the least well-off members of society who spend a greater percentage of their income on the weekly shop. Obesity is a complex problem, and cannot be attributed to just one product.  Information and education, not tax, is the way to teach people how to eat balanced diets and lead healthy, active lifestyles.

The full WHO Europe report can be read here.