(originally published on 22 August 2016, The Health Spectator)
The Health Spectator published an article on economic implications of the sugar levy on 22 August 2016.
The article assesses the pros and cons of the sugar levy in the UK and suggests a strong rethink of the strategy based on basic economic principles.
Read the full article here:
(originally published on 23 November 2016, The Guardian)
The Guardian published a video of Australia’s Deputy Prime Minister Barnaby Joyce on a sugar tax on 23 November 2016.
In his speech, the Deputy Prime Minister underlines the moral issues connected with a sugar tax, which in his view would cost a lot of problems after certain recommendations that sweetened beverages would be taxed at a higher rate.
Read the full article here:
Christopher Snowdon on The Spectator highlights the counterfactual evidence against the three main claims used by the UK Treasury to justify the introduction of a of the Soda Tax in 2018, as announced by former chancellor George Osborne earlier this year.
According to the Treasury’s the tax will only affect corporate profits, not consumers; yet the author contends that consumers, not companies, will be the most affected. While he recognizes that companies are not forced to raise the prices of their products, he points out that the national Office for Budget Responsibility (OBR) expects the levy “to be passed entirely on to the price paid by consumers”.
The second claim is that the tax will incentivise large-scale sugar reduction in soft drinks; Snowdon denounces that “the government has picked on the one part of the food and drink industry that has undergone extensive reformulation and told them to somehow do it all over again”. He argues that the soft-drink industry already provides low and no-calorie alternatives of their products, suggesting there is little room left for further reformulation. The amount of sugar consumed through beverages solely depends on consumers’ preferences.
The third claim presents the tax as the best way to raise money for anti-obesity initiatives. According to the OBR the levy will raise £500 million a year, yet it requires a cost of £1 billion for its implementation alone, enforcement costs and the rise of index-linked salaries, benefits, and public sector pensions are on top of that. Phil Wadsworth, chief actuary at JLT Employee Benefits, estimates that the sugar levy will add £3 billion to UK pensions liabilities. Snowdon warns that any revenue generated by the levy will have no other purpose than to cover its costs for many years to come.
Snowdon concludes with an appeal “the sugar levy aims to do something that has already been done (reformulation of soft drinks) with a tax that will lose the government money… a rethink is urgently needed”.
You may find the original article on The Spectator website
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.
The Finnish government has scrapped a plan to replace the current tax on sweets with a tax on sugar, stressing that such measure would be difficult to implement and its health impact is not clear.
The idea for a sugar tax was tabled by the National Institute for Health and Wellness (THL) – a research and development institute under the Finnish Ministry of Social Affairs and Health – to replace the existing excise duty on sweets, which has been abolished with effect as of January 2017 after the European Commission suggested it could constitute unlawful state aid.
The consequent loss of revenues has forced some government officials to look for other fiscal measures, making clear that the main reason behind a sugar tax would be economical.
However, the Ministry of Finance itself has ruled out this option. Through Merja Sandell, it stressed that a sugar tax “would be a bureaucratic burden” and difficult to put in place. Another senior official said it will not lead to the desired health effects.
The full article is available (in Swedish) here.
In an interview available on the website of the Bulgarian Ministry of Finance, the Minister Vladislav Goranov, asked to comment on the matter, has voiced his opposition to the much debated proposal of a ‘food tax’.
The Finance Minister questioned whether it is appropriate to change consumers’ behaviour through the introduction of new taxes, adding that this very goal would fail. Moreover, he expressed his concern that such a measure could result in the smuggling of similar goods not subject to taxation from neighbouring countries.
In conclusion, Minister Goranov stated that most likely this type of tax will not be introduced.