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.
Obesity is a critical global issue that requires a comprehensive, international intervention strategy.
Much of the global debate on this issue has become polarized and sometimes deeply antagonistic. Obesity is a complex, systemic issue with no single or simple solution. The global discord surrounding how to move forward underscores the need for integrated assessments of potential solutions.
A new McKinsey Global Institute (MGI) discussion paper, Overcoming obesity: An initial economic analysis, seeks to overcome these hurdles by offering an independent view on the components of a potential strategy.
The main findings of the discussion paper include:
- Existing evidence indicates that no single intervention is likely to have a significant overall impact.
- Education and personal responsibility are critical elements of any program aiming to reduce obesity
- No individual sector in society can address obesity on its own
Read the full paper here.
This systematic academic review focused specifically on the role of sugar-sweetened beverages in obesity risk, taking into account energy balance.
Scientific conclusions could not be drawn from the intervention studies that evaluated the relationship between sugar-sweetened beverage intake and obesity risk.
Results of observational studies that examined the relationship between sugar-sweetened beverage intake and obesity risk that were adjusted for energy intake and physical activity were inconsistent for each of the three age groups evaluated (children, adolescents, and adults).
From this review, evidence for an association between sugar-sweetened beverage intake and obesity risk is inconsistent when adjustment for energy balance is made.
Read the full study here.
First published in ‘Nutrition Reviews’, Volume 72, Issue 9, pages 566–574, September 2014
Authors: Paula R Trumbo and Crystal R Rivers
What do Latin American governments do when they realize they are spending more money than they have? In part, they raise taxes on the poor in the name of fighting obesity by taxing food and beverages. That’s only the beginning of the ugliness.
It started last year in Mexico, where former New York City Mayor Michael Bloomberg spent a controversial $10 million of his own money to influence the outcome of a proposed tax on sugar-sweetened beverages and high-calorie foods. The billionaire’s own advocacy group now admits that the money was used, in part, to fund scientists to produce research that would support the taxes, according to both the Associated Press and the Bloomberg Philanthropies webpage. This type of outcome-oriented research may get the job done in terms of advancing a political agenda, but it won’t address obesity.
A recent article in the American Journal of Agricultural Economics explains consumer behavior in the face of such taxes. Lead author Chen Zhen explained, “Consumers can simply substitute a taxed high calorie for an untaxed one.” Reduced consumption of certain foods does not necessarily cause a reduction in obesity.
In fact, Bloomberg food police ally Marion Nestle, food policy and nutrition professor at New York University told Politico last month that, “If the taxes are shown to reduce consumption – and I’m hoping studies are under way – I’d say it’s game over.” The taxes will be adopted across the United States even if the Bloomberg-funded Mexican tax has an impact only on consumption, but not obesity.
Now, after enactment last year of a peso-per-liter soda tax in Mexico, the fad is spreading to other nations of Latin America. Chilean president Michelle Bachelet is enacting a soda tax as part of a wider set of measures targeting foods she doesn’t want her citizens to eat. So is Argentina, as it teeters on the brink of its second debt default in 13 years. In Brazil, where officials increased taxes on sodas, beer and energy drinks by 19 percent to 23 percent over the past two years, revenue-starved officials sought a further tax hike timed to bilk thirsty soccer fans from around the world. At the last minute, the World Cup taxes were given a time out until the fall.
Clearly, the science to support these taxes as a serious anti-obesity tool hasn’t yet been established, despite Bloomberg’s millions. So why was the tax adopted?
Rather simply, it is Sutton’s Law. The “law” is named after the infamous American bank robber Willie Sutton, who was incorrectly credited with answering a reporter who asked him why he robs banks by saying, “That’s where the money is.”
According to Christopher Wilson, an associate at the Mexico Institute of the Woodrow Wilson International Center for Scholars, “Traditionally, 30 to 40 percent of the budget came from oil exports, and that has been declining. That has made for a strong imperative to increase tax collection, which is extraordinarily low as a portion of GDP, and that is the driving force behind fiscal reform,” Wilson told the magazine, Governing, in reference to the food and soda tax. Mexicans spend money on high-calorie food and soda, so Willie Sutton would have taxed it, too.
The problem is, taxes on sugar-sweetened beverages and so-called “junk-foods” have a disproportionate impact on the poor. To Bloomberg, whom nobody could accuse of being poor, this isn’t a bug, it’s a feature. Since there’s a high-rate of obesity among lower socio-economic groups, a sin tax that hits poor people the hardest is right on target.
But there’s more to it than money. Even proponents of the taxes concede they aren’t a silver bullet. Throughout Latin America, advocates are pushing a full menu of laws and regulations aimed at soda and food. At the top of the food police wish-list is a restriction on the advertising of foods they don’t want people to eat. Instead of following the science, proponents of advertising restrictions attempt to advance their cause in a way that makes Bloomberg’s attempt to purchase science look honorable by comparison. Activists in Canada, the United States and Chile are suggesting that advertising to kids is akin to molesting children.
Assistant Professor at the University of Ottawa Dr. Yoni Freedhoff says it most delicately, “We need to stop allowing the food industry to target our most vulnerable and precious population, our children.” New York’s Meme Roth, founder of “National Action Against Obesity” is less subtle in evoking thoughts of child molestation by referring to food advertising to children as “predatory” and arguing that we shouldn’t let food company executives have a “relationship with our kids.”
But it took the chairman of the Committee on Health of the Chilean Senate to put innuendo aside and make the allegation Freedhoff and Roth were too polite to directly state. Senator Guido Girardi, told La Nacion that (as translated by Google), “Chile has companies that are the pedophiles of the 21st century, because they abuse children by labeling fatty and sugary food as healthy.”
In their zeal to advance an unpopular agenda, it’s the food police who have become the real creeps. Advocates who want to fight obesity have their hearts in the right place. But that shouldn’t free them from being held to legitimate science and common standards of decency. With a little less emotionally manipulative rhetoric and a bit more nonpartisan science, we could come together and address obesity in a constructive way.
By Jeff Stier
Please find the whole article here.
Colorado: Reports that Telluride, Colorado voters “overwhelmingly” rejected a proposed sugar-sweetened drink tax. Elisa Marie Overall, spokeswoman for Kick the Can Telluride, the group pushing the ballot question, said voters voted down the tax by a 68% to 32% margin. The proposal would have imposed a one cent per ounce tax on fizzy drinks, sports and energy drinks, and on sweetened coffees and tea beverages. Also noted is that similar tax proposals have already been rejected in California. The New York large fizzy drink ban proposed by Mayor Michael Bloomberg, which is still being appealed, is also mentioned.