As the French Parliament is currently debating whether to reshape and increase the tax on soft drinks, an opinion piece published on 9 November in the French newspaper Le Figaro warns readers about the effects of an increase of the current soda tax in place in France.
Bill Wirtz, analyst for European Students for Liberty, argues that such a move would be another Nanny State measure that would penalize the poorest French households, as confirmed by the French Health Minister Buzyn in interviews early October before the proposal was introduced by an MP in the National Assembly.
Wirtz underlines that such taxes may have unintended consequences, such as substitution towards cheaper products containing the same amount of sugar. He also refers to the tax introduced in Denmark which was abolished 15 months later by the government that introduced it for lack of concrete public health results.
The opinion piece can be found in Le Figaro 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
London’s business focused newspaper City A.M. reports the results of a study conducted by the think tank Taxpayer’s Alliance on the impact of the UK sugar tax. Announced by former UK chancellor George Osborne earlier this year the levy, which specifically target soft drinks, is set to enter into force in 2018.
TPA calculated that the levy could lead to an estimated loss of 5’624 jobs for the UK market, equivalent to over £90 million in average industry and associated sector wages. This would consequently lead to a loss for the Treasury of over £17 million in job-related taxes, namely employee’s National Insurance contributions and Income Tax, and employer’s National Insurance contributions. TPA Chief Executive Jonathan Isaby warned: “Not only will the sugar tax fail in its public health aims, there is a very real risk that it will destroy jobs and harm economic growth. Given it will also hit the poorest households the hardest, the already flimsy case for a sugar tax is rapidly dissolving”.
The expected impact of the UK sugar tax was calculated on the outcomes of a similar levy introduced in Mexico in January 2014, which caused an estimated loss of 10’815 jobs since its introduction, but only led to a reduction in daily consumption of a mere “10 millilitres per day or 4.6 calories … the equivalent to a bite of an apple 5% of a slice of Tesco wholemeal bread or 2.3% of a can of Heinz Tomato Soup”, as previously reported by The Sun.
You may find the full article by Francesca Washtell on the City A.M website
You may also find The Sun article by Steve Hawkes on The Sun website
In view of the possible introduction of a tax on soft drinks in Colombia, the newspaper El Nuevo Día interviewed the executive director of the ANDI Chamber of the Beverage Industry, Santiago López Jaramillo. The tax proposal is currently being discussed by an experts committee and will be submitted to the congress by the end of the year, although, according to López Jaramillo, the Minister of Health already requested an analysis of the potential impact of the soft drinks tax, and neither the commission of tax experts set up for the task, nor the OECD recommended it.
López Jaramillo pointed out that the people most affected by the introduction of a tax would be the lower income households, which spend a greater share of their resources on soft drinks; such an impact is of great concern especially in those rural areas where bottled drinks constitute the sole reliable source of potable water.
The negative impact goes beyond that on consumers, according to López Jaramillo the 37% of income revenue for 600 thousands Colombian families depends on the sales of soft drinks. The risk is to repeat what Mexico experienced, where 30 thousand shops closed and 10’800 jobs were lost following the introduction of a soft drinks tax. The emblematic case of Denmark is also mentioned, where a similar levy was dismantled 15 months after its introductions, as it failed to meet its health targets, while at the same time it impacted negatively the economy.
Asked about the positive effect of the tax on people’s health López Jaramillo replied that it was paradoxical that the suggested measure is the one that failed when implemented in other countries. The root of Colombian health problems lies in the population lifestyles, as Colombia is the second most sedentary country worldwide according to the WHO, he said.
The full article from El Nuevo Día can be found here
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.
In a recent article Brook Whelan from the Huffignton Post takes a closer look at the effects on the UK economy of the freshly brewed “sugar tax”, which was designed and announced by the British Government on March 16 2016 and should be put in place two years from now, in April 2018.
Whelan describes the tax as an « anti-consumer and anti-business » measure. Although he recognizes obesity to be an issue of concern, he argues that in its current form the tax is just a “gimmick” that fails to address the problem. On top of that he criticises the measure for curbing the consumer’s’ freedom of choice.
Whelan estimates that the set up costs of a sugar tax would constitute a £1 billion burden on the state finances, a « scandal » and a « complete shambles » he says, asserting that the money could be better spent elsewhere in the health service.
The articles concludes with an appeal to Chancellor Osborne and the Government to do a U-turn and scrap the tax before its implementation, recalling the pastry tax precedent.
The original article is available on the Huffington Post website.