UK think tank stresses “taxes on food and soft drinks are ineffective”

A new paper, published by the UK think tank Institute of Economic Affairs, scrutinises the justification for increasing government interference in the sugar market, as has been recently proposed by the British Medical Association with its call for a 20 per cent sugar tax.

While the paper, Sweet Truth – Is there a market failure in sugar?, discusses a broader range of possible policies to reduce sugar consumption, it is mainly the conclusion on food taxes that catches the eye:

“Taxes on food and soft drinks have been shown to be ineffective in reducing obesity due to inelastic demand and substitution effects. The cost to the taxpayer far exceeds any savings that might be made and the highest burden would fall on low income consumers. Moreover, it is extremely doubtful whether obesity, however caused, places an additional burden on public finances. Pigouvian taxes on sugar, soda or fat cannot therefore be justified on economic grounds. Such taxes are typically introduced as revenue-raising measures and should be seen as stealth taxes, not health taxes”.

Some of the other interesting findings of the paper include the fact that Britons today consume less sugar per head than they did in 1900, while patterns of obesity and diabetes have not followed patterns of sugar consumption at the population level.

Furthermore, the authors conclude that there is insufficient scientific evidence to label any common ingredient, including sugar, as addictive. Similarly, there is insufficient evidence to suggest that a calorie from sugar is more fattening than a calorie from other foods.

Finally, the paper also makes a case against ‘traffic light’ labelling, mandatory reformulation and a ban on advertising for foodstuffs that are high in fat, salt or sugar.

The full paper, Sweet Truth – Is there a market failure in sugar?, can be found here.