(originally published on 16 December 2016, ConscienHealth)
The ConscienHealth published an article on the actual results of the sugar tax in Mexico on 16 December 2016.
The article argues, based on new results from Mexico’s 2016 National Health and Nutrition Survey, that despite the sugar tax introduction in 2014, there has been an increase in nationwide obesity of Mexican adults between 2012 and 2016.
Read the full article here:
The working paper released by the New Zealand Treasury challenges the argument according to which a tax on sugar-sweetened beverages (SSBs) could be the most effective strategy to fight obesity as it neglects the multiple dimensions linked to this burden. The main argument presented by the author shows that introducing a tax on SSBs will not necessarily mean significant reduction in calorie consumption by consumers and for a number of reasons.
The paper firstly argues that the health status of those responding to a price increase is generally unknown and higher responses may come from healthy consumers rather than the target population group. Moreover, surveys typically measure expenditures rather than consumption and its effects can be experienced after a period of time longer than the survey period.
The author also aims at demonstrating the importance of the substitution effect of imposing a selective tax. Indeed, substitution towards lower-priced SSBs could have harmful rather than beneficial effects. Another problem he underlines is that emphasis is often only placed on the own-price elasticity of demand for SSBs although substitution towards other non-taxed goods that are high in calories can also take place, reducing or even eliminating any direct reduction in the consumption of SSBs. To illustrate the importance of the substitution effect, the author uses a mathematical model designed to examine the effect of total calorie consumption of a selective tax, rather than simply the consumption of SSBs. The conclusions show that the substitution effect to other non-taxed commodities with relatively high calorie content is significant and that imposing a sugar tax does not necessarily mean lower calorie consumption for consumers.
Full paper can be found here
The Sun reports that the UK sugar tax, set to enter into force in April 2018, is facing rising opposition which questions both its merits and its design.
Taxpayers Alliance is criticizing the Government for the introduction of a regressive tax that will raise the cost of living for those less well-off families that endure a daily struggle against tax bills. Drawing from the Mexican precedent the citizens’ association calls out the ineffectiveness of such a measure: in 2014 Mexico introduced a tax on fizzy drinks which led to a reduction in daily consumption of some mere 5 calories, as much as five percent of a slice of wholemeal bread.
Taxpayers Alliance chief Jonathan Isaby said: “It is astonishing that the government is pressing ahead with this pernicious tax when the evidence clearly suggests that it will simply not affect consumption in any meaningful way.”
The Alliance accuses UK’s Councellor George Osborne of pursuing Nanny State policies and demands for the initiative to be revoked.
Lawyers consulted on the matter argue that the tax might be blocked by European courts on discriminatory grounds – given the high sugar drinks such as milk-based and coffee-based beverages are exempt from the duty.
You may find the full article by Steve Hawkes on The Sun website.
An article from the BBC warns the public about the collateral effects of the UK sugar tax, announced by the Government this March it should see daylight starting April 2018.
According to the UK’s own national broadcasting service the Government’s new measure will negatively impact a share of the British population that already struggle with a life-threatening condition: type 1 diabetes. People affected by type 1 diabetes are at risk of suffering from complication due to hypoglycemia, an insufficient level of blood glucose, which can lead to a diabetic coma. To prevent this from happening diabetics compensate by increasing their intake of sugar; the BBC reports that typically this is done by consuming sugary beverages.
The interviews conducted by the BBC and reported in the article cast a light on the detrimental impact of the tax on the purchasing power the families of diabetics. As a concerned parent commented «the sugar tax will mean keeping my son alive just got a lot more expensive».
The chief executive of Diabetes UK Chris Askew voices the widespread concern among diabetics about the sugar tax, stressing that the introduction of the measure in its current form will «adversely impact on the way people manage their condition» and reminding that type 1 diabetes «is not linked to lifestyle and cannot be prevented».
You may find the original article on the BBC website.
A new report based on real-world examples by the prestigious UK-based think tank Institute for Economic Affairs demonstrates that sugar taxes are ineffective, regressive and inefficient.
The main findings confirm what many other studies have already shown, in particular:
- The demand for sugary drinks, snacks and fatty foods is inelastic: evidence demonstrates that most people will not change their food shopping habits unless prices change dramatically
- Consumers respond by substituting taxed food and drinks with cheaper brands of the same products or with similar non-taxed products. This behaviour leads to the consumption of potentially inferior goods rather than the consumption of fewer calories
- Consumers tend to switch from taxed sugary drinks to other high calorie drinks such as fruit juice, milk or alcohol
- Food taxes are highly regressive and severely hit low income households because energy-dense food and soft drinks take a greater share of their earnings than that of higher income households
- Most notably, no impact on health has ever been found
Asked to comment on the report, Chris Snowdon, Head of Lifestyle Economics at the Institute of Economic Affairs, said that the effectiveness of sugar taxes as health measures lack “any real world evidence”.
“It’s high time this policy [taxing sugar] is put to bed” – he concluded.
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.